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What changed in Sarepta Therapeutics, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Sarepta Therapeutics, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+281 added−290 removedSource: 10-K (2024-02-28) vs 10-K (2023-02-28)

Top changes in Sarepta Therapeutics, Inc.'s 2023 10-K

281 paragraphs added · 290 removed · 236 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

146 edited+28 added−19 removed323 unchanged
Biggest changeFor example, we face competition in the field of Duchenne by third parties who are developing or who had once developed: (i) exon skipping product candidates, such as Wave (notably for exons 51 and 53), Nippon Shinyaku (notably for exon 44 and exon 53, for which it has received FDA approval for its product Viltepso (viltolarsen)), Daiichi (notably for exon 45), Dyne Therapeutics pursuing antibody-oligonucleotide conjugates for exons 44, 45, 51, and 53, Avidity Biosciences pursuing antibody-oligonucleotide conjugates for exons 44, 45 and 51, PepGen (notably for exon 51) and BioMarin (BMN-351 for exon 51); (ii) gene therapies, such as Pfizer and Solid (in partnership with Ultragenyx), and Regenxbio; (iii) gene editing, including CRISPR/Cas 9 approaches, such as Exonics Therapeutics (acquired by Vertex Pharmaceuticals), CRISPR Therapeutics, Editas Medicine, Beam Therapeutics Inc.
Biggest changeFor example, we face competition in the field of Duchenne by third parties who are developing or who had once developed: (i) exon skipping product candidates, such as Wave (notably for exons 51 and 53), Nippon Shinyaku (notably for exon 44 and exon 53, for which it has received FDA approval for its product Viltepso (viltolarsen)), Daiichi (notably for exon 45), Dyne Therapeutics pursuing antibody-oligonucleotide conjugates for exons 44, 45, 51, and 53, Avidity Biosciences pursuing antibody-oligonucleotide conjugates for exons 44, 45 and 51, PepGen (notably for exon 51), SQY Therapeutics and BioMarin (BMN-351 for exon 51); (ii) gene therapies, such as Pfizer and Solid (in partnership with Ultragenyx), and Regenxbio; (iii) gene editing, including CRISPR/Cas 9 approaches, such as Exonics Therapeutics (acquired by Vertex Pharmaceuticals), CRISPR Therapeutics, Editas Medicine, and Precision Biosciences (in partnership with Eli Lilly); (iv) other disease modifying approaches, such as PTC Therapeutics, which has a small molecule candidate, ataluren, that targets nonsense mutations; and (v) other approaches that may be palliative in nature or potentially complementary with our products and product candidates and that are or were once being developed by Santhera, Catabasis, Fibrogen, ReveraGen, Capricor Therapeutics (in partnership with Nippon Shinyaku), BioPhytis, Mallinckrodt, Antisense Therapeutics, Italfarmco, Dystrogen and Edgewise Therapeutics.
More restrictive regulations or claims that our product candidates are unsafe or pose a hazard could prevent us from commercializing any products. New government requirements may be established that could delay or prevent regulatory approval of our product candidates under development.
More restrictive regulations or claims that our products or product candidates are unsafe or pose a hazard could prevent us from commercializing any products. New government requirements may be established that could delay or prevent regulatory approval of our product candidates under development.
We may not realize the anticipated benefits of such collaborations, and the anticipated benefits of any future collaborations or strategic relationships, each of which involves numerous risks, including: • collaborators have significant discretion in determining the efforts and resources that they will apply to a collaboration; • collaborators may not pursue development and commercialization of our products or product candidates based on clinical trial results, changes in their strategic focus due to the acquisition of competitive products, availability of funding, or other external factors, such as a business combination that diverts resources or creates competing priorities; • collaborators may delay clinical trials, provide insufficient funding for a clinical trial, stop a clinical trial, abandon a product candidate, repeat or conduct new clinical trials, or require a new formulation of a product candidate for clinical testing; • collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with our products or product candidates, or otherwise undermine or devalue the efforts of our collaboration; • collaborators may not properly maintain or defend our intellectual property rights or may use our intellectual property or proprietary information in a way that gives rise to actual or threatened litigation that could jeopardize or invalidate our intellectual property or proprietary information or expose us to potential liability; • disputes may arise between us and a collaborator that cause the delay or termination of the research, development or commercialization of our products or product candidates, or that result in costly litigation or arbitration that diverts management attention and resources; • collaborations may be terminated and, if terminated, may eliminate our rights to commercialize certain product candidates or may result in a need for additional capital; • failure to successfully develop the acquired or licensed drugs or technology or to achieve strategic objectives, including successfully developing and commercializing the drugs, drug candidates or technologies that we acquire or license; • entry into markets in which we have no or limited direct prior experience or where competitors in such markets have stronger market positions; • disruption of our ongoing business, distraction of our management and employees from other opportunities and challenges and retention of key employees; • potential failure of the due diligence processes to identify significant problems, liabilities or other shortcomings or challenges of an acquired company, or acquired or licensed product or technology, including but not limited to, problems, liabilities or other shortcomings or challenges with respect to intellectual property, product quality, safety, accounting practices, employee, customer or third-party relations and other known and unknown liabilities; • liability for activities of the acquired company or licensor before the acquisition or license, including intellectual property infringement claims, violations of laws, commercial disputes, tax liabilities, and other known and unknown liabilities; • exposure to litigation or other claims in connection with, or inheritance of claims or litigation risk as a result of an acquisition or license, including but not limited to, claims from terminated employees, customers, former equity holders or other third-parties; • difficulty in integrating the products, product candidates, technologies, business operations and personnel of an acquired asset or company; and • difficulties in the integration of the acquired company’s departments, systems, including accounting, human resource and other administrative systems, technologies, books and records, and procedures, as well as in maintaining uniform standards, controls, including internal control over financial reporting required by the Sarbanes-Oxley Act of 2002 and related procedures and policies.
We may not realize the anticipated benefits of such collaborations, and the anticipated benefits of any future collaborations or strategic relationships, each of which involves numerous risks, including: • collaborators have significant discretion in determining the efforts and resources that they will apply to a collaboration; • collaborators may not pursue development and commercialization of our products or product candidates based on clinical trial results, changes in their strategic focus due to the acquisition of competitive products, availability of funding, or other external factors, such as a business combination that diverts resources or creates competing priorities; • collaborators may delay clinical trials, provide insufficient funding for a clinical trial, stop a clinical trial, abandon a product candidate, repeat or conduct new clinical trials, or require a new formulation of a product candidate for clinical testing; • collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with our products or product candidates, or otherwise undermine or devalue the efforts of our collaboration; • collaborators may not properly maintain or defend our intellectual property rights or may use our intellectual property or proprietary information in a way that gives rise to actual or threatened litigation that could jeopardize or invalidate our intellectual property or proprietary information or expose us to potential liability; - 41 - • disputes may arise between us and a collaborator that cause the delay or termination of the research, development or commercialization of our products or product candidates, or that result in costly litigation or arbitration that diverts management attention and resources; • collaborations may be terminated and, if terminated, may eliminate our rights to commercialize certain product candidates or may result in a need for additional capital; • failure to successfully develop the acquired or licensed drugs or technology or to achieve strategic objectives, including successfully developing and commercializing the drugs, drug candidates or technologies that we acquire or license; • entry into markets in which we have no or limited direct prior experience or where competitors in such markets have stronger market positions; • disruption of our ongoing business, distraction of our management and employees from other opportunities and challenges and retention of key employees; • potential failure of the due diligence processes to identify significant problems, liabilities or other shortcomings or challenges of an acquired company, or acquired or licensed product or technology, including but not limited to, problems, liabilities or other shortcomings or challenges with respect to intellectual property, product quality, safety, accounting practices, employee, customer or third-party relations and other known and unknown liabilities; • liability for activities of the acquired company or licensor before the acquisition or license, including intellectual property infringement claims, violations of laws, commercial disputes, tax liabilities, and other known and unknown liabilities; • exposure to litigation or other claims in connection with, or inheritance of claims or litigation risk as a result of an acquisition or license, including but not limited to, claims from terminated employees, customers, former equity holders or other third-parties; • difficulty in integrating the products, product candidates, technologies, business operations and personnel of an acquired asset or company; and • difficulties in the integration of the acquired company’s departments, systems, including accounting, human resource and other administrative systems, technologies, books and records, and procedures, as well as in maintaining uniform standards, controls, including internal control over financial reporting required by the Sarbanes-Oxley Act of 2002 and related procedures and policies.
We do not know whether any of our clinical trials will begin or be completed, and results announced, as planned or expected, if at all, as the commencement and completion of clinical trials and announcement of results is often delayed or prevented for a number of reasons, including, among others: • denial by the regulatory agencies of permission to proceed with our planned clinical trials or any other clinical trials we may initiate, or placement of a clinical trial on hold; • delays in filing or receiving approvals of additional INDs that may be required; • negative and/or unanticipated results from our ongoing non-clinical trials or clinical trials; • challenges in identifying, recruiting, enrolling and retaining patients to participate in clinical trials; • challenges with subject compliance within clinical trials; • timely and effectively contract with (under reasonable terms), manage and work with investigators, institutions, hospitals and the CROs/ vendors involved in the clinical trial; • negotiate contracts and other related documents with clinical trial parties and institutional review boards, such as informed consents, CRO agreements and site agreements, which can be subject to extensive negotiations that could cause significant delays in the clinical trial process, with terms possibly varying significantly among different trial sites and CROs and possibly subjecting the Company to various risks; • inadequate quantity or quality of supplies of a product candidate or other materials necessary to conduct clinical trials, for example as a result of delays in defining and implementing the manufacturing process for materials used in pivotal trials or for the manufacture of larger quantities or other delays or issues arising in the manufacturing of sufficient supply of finished drug product; • difficulties obtaining institutional review board (“IRB”) approval, and equivalent (Ethics Committees or ECs) approval for sites outside the U.S., to conduct a clinical trial at a prospective site or sites; • ensure adherence to trial designs and protocols agreed upon and approved by regulatory authorities and applicable legal and regulatory guidelines; • delays or problems in analyzing data, or the need for additional analysis or data or the need to enroll additional patients; • the occurrence of serious adverse events or unexpected drug-related side effects experienced by patients in a clinical trial or unexpected results in ongoing non-clinical trials; - 43 - • delays in validating endpoints utilized in a clinical trial; • delays in validating outcome assessments needed in a clinical trial; • our inability to have formal meetings with the regulatory agencies or to interact with them on a regular basis; • our inability to satisfy the requirements of the regulatory agencies to commence clinical trials, such as developing potency assays and lot release specifications that correlate with the activity or response of the product candidate or other CMC requirements; • the regulatory agencies disagreeing with our clinical trial design and our interpretation of data from clinical trials, or changing the requirements for approval even after the regulatory authority has reviewed and commented on the design for our clinical trials; • reports from non-clinical or clinical testing of competing therapies that raise safety or efficacy concerns; and • the recruitment and retention of employees, consultants or contractors with the required level of expertise.
We do not know whether any of our clinical trials will begin or be completed, and results announced, as planned or expected, if at all, as the commencement and completion of clinical trials and announcement of results is often delayed or prevented for a number of reasons, including, among others: • denial by the regulatory agencies of permission to proceed with our planned clinical trials or any other clinical trials we may initiate, or placement of a clinical trial on hold; • delays in filing or receiving approvals of additional INDs that may be required; • negative and/or unanticipated results from our ongoing non-clinical trials or clinical trials; • challenges in identifying, recruiting, enrolling and retaining patients to participate in clinical trials; • challenges with subject compliance within clinical trials; • timely and effectively contract with (under reasonable terms), manage and work with investigators, institutions, hospitals and the CROs/ vendors involved in the clinical trial; • negotiate contracts and other related documents with clinical trial parties and institutional review boards, such as informed consents, CRO agreements and site agreements, which can be subject to extensive negotiations that could cause significant delays in the clinical trial process, with terms possibly varying significantly among different trial sites and CROs and possibly subjecting the Company to various risks; • inadequate quantity or quality of supplies of a product candidate or other materials necessary to conduct clinical trials, for example as a result of delays in defining and implementing the manufacturing process for materials used in pivotal trials or for the manufacture of larger quantities or other delays or issues arising in the manufacturing of sufficient supply of finished drug product; • difficulties obtaining institutional review board (“IRB”) approval, and equivalent (Ethics Committees or ECs) approval for sites outside the U.S., to conduct a clinical trial at a prospective site or sites; • ensure adherence to trial designs and protocols agreed upon and approved by regulatory authorities and applicable legal and regulatory guidelines; • delays or problems in analyzing data, or the need for additional analysis or data or the need to enroll additional patients; • the occurrence of serious adverse events or unexpected drug-related side effects experienced by patients in a clinical trial or unexpected results in ongoing non-clinical trials; • delays in validating endpoints utilized in a clinical trial; • delays in validating outcome assessments needed in a clinical trial; • our inability to have formal meetings with the regulatory agencies or to interact with them on a regular basis; • our inability to satisfy the requirements of the regulatory agencies to commence clinical trials, such as developing potency assays and lot release specifications that correlate with the activity or response of the product candidate or other CMC requirements; • the regulatory agencies disagreeing with our clinical trial design and our interpretation of data from clinical trials, or changing the requirements for approval even after the regulatory authority has reviewed and commented on the design for our clinical trials; • reports from non-clinical or clinical testing of competing therapies that raise safety or efficacy concerns; and • the recruitment and retention of employees, consultants or contractors with the required level of expertise.
Obtaining marketing approval in a country outside of the U.S. is an extensive, lengthy, expensive and uncertain process, and the regulatory authority may reject an application or delay, limit or deny approval of any of our products for many reasons, including: • we may not be able to demonstrate to the satisfaction of regulatory authorities outside the U.S. the risk benefit of our products; • the results of clinical trials may not meet the level of statistical or clinical significance required for approval by regulatory authorities outside the U.S.; • regulatory authorities outside the U.S. may disagree with the adequacy (number, design, size, controls, conduct or implementation) of our clinical trials prior to granting approval, and we may not be able to generate the required data on a timely basis, or at all; • regulatory authorities outside the U.S. may conclude that data we submit to them fail to demonstrate an appropriate level of safety or efficacy of our products, or that our products’ respective clinical benefits outweigh their safety risks; • regulatory authorities outside the U.S. may not accept data generated at our clinical trial sites or require us to generate additional data or information; • regulatory authorities outside the U.S. may impose limitations or restrictions on the approved labeling of our products, thus limiting intended users or providing an additional hurdle for market acceptance of the product; - 36 - • regulatory authorities outside the U.S. may identify deficiencies in the manufacturing processes, or may require us to change our manufacturing process or specifications; and • regulatory authorities outside the U.S. may adopt new or revised approval policies and regulations.
Obtaining marketing approval in a country outside of the U.S. is an extensive, lengthy, expensive and uncertain process, and the regulatory authority may reject an application or delay, limit or deny approval of any of our products for many reasons, including: • we may not be able to demonstrate to the satisfaction of regulatory authorities outside the U.S. the risk benefit of our products; • the results of clinical trials may not meet the level of statistical or clinical significance required for approval by regulatory authorities outside the U.S.; • regulatory authorities outside the U.S. may disagree with the adequacy (number, design, size, controls, conduct or implementation) of our clinical trials prior to granting approval, and we may not be able to generate the required data on a timely basis, or at all; • regulatory authorities outside the U.S. may conclude that data we submit to them fail to demonstrate an appropriate level of safety or efficacy of our products, or that our products’ respective clinical benefits outweigh their safety risks; • regulatory authorities outside the U.S. may not accept data generated at our clinical trial sites or require us to generate additional data or information; • regulatory authorities outside the U.S. may impose limitations or restrictions on the approved labeling of our products, thus limiting intended users or providing an additional hurdle for market acceptance of the product; • regulatory authorities outside the U.S. may identify deficiencies in the manufacturing processes, or may require us to change our manufacturing process or specifications; and • regulatory authorities outside the U.S. may adopt new or revised approval policies and regulations.
Even if we meet FDA requirements and an advisory committee votes to recommend approval of an NDA or BLA submission, the FDA could still disagree with the advisory committee’s recommendation and deny approval of a product candidate based on their review. • The regulatory approval process for product candidates targeting orphan diseases, such as Duchenne, that use new technologies and processes, such as antisense oligonucleotide therapies, gene therapy and other alternative approaches or endpoints for the determination of efficacy is uncertain due to, among other factors, evolving interpretations of a new therapeutic class, the broad discretion of regulatory authorities, lack of precedent, small safety databases, varying levels of applicable expertise of regulators or their advisory committees, scientific developments, changes in the competitor landscape, shifting political priorities and changes in applicable laws, rules or regulations and interpretations of the same.
Even if we meet FDA requirements and an advisory committee votes to recommend approval of an NDA or BLA submission, the FDA could still disagree with the advisory committee’s recommendation and deny approval of a product candidate based on their review. - 46 - • The regulatory approval process for product candidates targeting orphan diseases, such as Duchenne, that use new technologies and processes, such as antisense oligonucleotide therapies, gene therapy and other alternative approaches or endpoints for the determination of efficacy is uncertain due to, among other factors, evolving interpretations of a new therapeutic class, the broad discretion of regulatory authorities, lack of precedent, small safety databases, varying levels of applicable expertise of regulators or their advisory committees, scientific developments, changes in the competitor landscape, shifting political priorities and changes in applicable laws, rules or regulations and interpretations of the same.
In addition, - 46 - in the U.S., an FDA advisory committee or regulators may disagree with our data analysis, interpretations and conclusions at any point in the approval process, which could negatively impact the approval of our NDA or BLA or result in a decision by the Company not to proceed with an NDA or BLA submission for a product candidate based on feedback from regulators. • We may not have the resources required to meet regulatory requirements and successfully navigate what is generally a lengthy, expensive and extensive approval process for commercialization of drug product candidates.
In addition, in the U.S., an FDA advisory committee or regulators may disagree with our data analysis, interpretations and conclusions at any point in the approval process, which could negatively impact the approval of our NDA or BLA or result in a decision by the Company not to proceed with an NDA or BLA submission for a product candidate based on feedback from regulators. • We may not have the resources required to meet regulatory requirements and successfully navigate what is generally a lengthy, expensive and extensive approval process for commercialization of drug product candidates.
Our competitors may, among other things, relative to our products or product candidates: • develop safer or more effective products; • implement more effective approaches to sales and marketing; • develop less costly products; • have lower cost of goods; • receive more favorable reimbursement coverage; • obtain preferred formulary status; • obtain regulatory approval more quickly; • have access to more manufacturing capacity; • develop products that are more convenient and easier to administer; • form more advantageous strategic alliances; or • establish superior intellectual property positions.
Our competitors may, among other things, relative to our products or product candidates: • develop safer or more effective products; • implement more effective approaches to sales and marketing; • develop less costly products; • have lower cost of goods; • receive more favorable reimbursement coverage; • obtain preferred formulary status; • obtain regulatory approval more quickly; • have access to more manufacturing capacity; - 40 - • develop products that are more convenient and easier to administer; • form more advantageous strategic alliances; or • establish superior intellectual property positions.
Failure to comply with domestic or foreign laws could result in various adverse consequences, including: possible delay in approval or refusal to approve a product, recalls, seizures or withdrawal of an approved product from the market, disruption in the supply or availability of our products or suspension of export or import privileges, the imposition of civil or criminal - 66 - sanctions, the prosecution of executives overseeing our international operations and damage to our reputation.
Failure to comply with domestic or foreign laws could result in various adverse consequences, including: possible delay in approval or refusal to approve a product, recalls, seizures or withdrawal of an approved product from the market, disruption in the supply or availability of our products or suspension of export or import privileges, the imposition of civil or criminal sanctions, the prosecution of executives overseeing our international operations and damage to our reputation.
When such disclosures occur, there is a risk that we fail to monitor and comply with applicable adverse event reporting obligations or we may not be able to defend ourselves or the public's legitimate interests in the face of the political and market pressures generated by social media due to restrictions on what we may say about our product and/or product - 67 - candidates.
When such disclosures occur, there is a risk that we fail to monitor and comply with applicable adverse event reporting obligations or we may not be able to defend ourselves or the public's legitimate interests in the face of the political and market pressures generated by social media due to restrictions on what we may say about our product and/or product candidates.
Furthermore, any problems in our manufacturing process or the facilities with which we contract make us a less attractive collaborator for potential partners, including larger pharmaceutical companies and academic research institutions, which could limit our access to additional attractive development programs. We, through our third-party manufacturers, seek to produce or produce supply of our products and product candidates.
Furthermore, any problems in our manufacturing process or the facilities with which we contract make us a less attractive collaborator for potential partners, including larger pharmaceutical companies and academic research institutions, which could limit our access to additional attractive development programs. - 51 - We, through our third-party manufacturers, seek to produce or produce supply of our products and product candidates.
Legislation has been introduced to amend the Orphan Drug Act in a way that may prevent these effects of the Catalyst decision, but it is unclear if or when such legislation could be enacted. In addition, we may face risks with maintaining regulatory exclusivities for our products, and our protection may be circumvented, even if maintained.
Legislation has been introduced to amend the Orphan Drug Act in a way that may prevent these effects of the Catalyst decision, but it is unclear if or when such legislation could be enacted. - 38 - In addition, we may face risks with maintaining regulatory exclusivities for our products, and our protection may be circumvented, even if maintained.
A RMAT designation is designed to accelerate approval for regenerative advanced therapies such as our gene therapy product candidates. Priority review designation is intended to - 48 - speed the FDA marketing application review timeframe for drugs that treat a serious condition and, if approved, would provide a significant improvement in safety or effectiveness.
A RMAT designation is designed to accelerate approval for regenerative advanced therapies such as our gene therapy product candidates. Priority review designation is intended to speed the FDA marketing application review timeframe for drugs that treat a serious condition and, if approved, would provide a significant improvement in safety or effectiveness.
Any inability to complete successfully pre-clinical and clinical development could result in additional costs to us or impair our ability to generate revenues from product sales, regulatory and commercialization milestones and royalties. In addition, manufacturing or formulation changes to our product candidates often require additional studies to demonstrate comparability of the modified product candidates to earlier versions.
Any inability to complete successfully pre-clinical and clinical development could result in additional costs to us or impair our ability to generate revenues from product sales, regulatory and commercialization milestones and royalties. In addition, manufacturing or formulation changes to our product candidates often require additional studies to demonstrate comparability of the - 44 - modified product candidates to earlier versions.
In particular, our success will depend upon physicians who specialize in the - 45 - treatment of genetic diseases targeted by our product candidates, prescribing treatments that involve the use of our product candidates in lieu of, or in addition to, existing treatments with which they are familiar and for which greater clinical data may be available.
In particular, our success will depend upon physicians who specialize in the treatment of genetic diseases targeted by our product candidates, prescribing treatments that involve the use of our product candidates in lieu of, or in addition to, existing treatments with which they are familiar and for which greater clinical data may be available.
The laws and regulations include: • federal healthcare anti-kickback law, which prohibit, among other things, persons from soliciting, receiving or providing remuneration, directly or indirectly, to induce either the referral of an individual, for an item or service or the purchasing or ordering of a good or service, for which payment may be made under federal healthcare programs such as Medicare and Medicaid; • federal false claims laws which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, information or claims for payment from Medicare, Medicaid or other third-party payors that are false or fraudulent; • the Federal Food, Drug and Cosmetic Act, which among other things, strictly regulates drug product and medical device marketing, prohibits manufacturers from marketing such products for off-label use and regulates the distribution of samples; • federal consumer protection and unfair competition laws, which broadly regulate marketplace activities and activities that potentially harm consumers; • federal laws that require pharmaceutical manufacturers to report certain calculated product prices to the government or provide certain discounts or rebates to government authorities or private entities, often as a condition of reimbursement under government healthcare programs; • the so-called “federal sunshine” law, which requires pharmaceutical and medical device companies to monitor and report certain financial interactions with teaching hospitals, physicians and certain non-physician practitioners to the federal government for re-disclosure to the public; and • state law equivalents of the above federal laws, such as anti-kickback and false claims laws which may apply to items or services reimbursed by any third party payor, including commercial insurers, state laws regulating interactions between pharmaceutical manufactures and healthcare providers, and state laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and often are not preempted by federal laws, thus complicating compliance efforts.
The laws and regulations include: • federal healthcare anti-kickback law, which prohibit, among other things, persons from soliciting, receiving or providing remuneration, directly or indirectly, to induce either the referral of an individual, for an item or service or the purchasing or ordering of a good or service, for which payment may be made under federal healthcare programs such as Medicare and Medicaid; • federal false claims laws which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, information or claims for payment from Medicare, Medicaid or other third-party payors that are false or fraudulent; • the Federal Food, Drug and Cosmetic Act, which among other things, strictly regulates drug product and medical device marketing, prohibits manufacturers from marketing such products for off-label use and regulates the distribution of samples; • federal consumer protection and unfair competition laws, which broadly regulate marketplace activities and activities that potentially harm consumers; • federal laws that require pharmaceutical manufacturers to report certain calculated product prices to the government or provide certain discounts or rebates to government authorities or private entities, often as a condition of reimbursement under government healthcare programs; - 56 - • the so-called “federal sunshine” law, which requires pharmaceutical and medical device companies to monitor and report certain financial interactions with teaching hospitals, physicians and certain non-physician practitioners as well as physician ownership interests to the federal government for re-disclosure to the public; and • state law equivalents of the above federal laws, such as anti-kickback and false claims laws which may apply to items or services reimbursed by any third party payor, including commercial insurers, state laws regulating interactions between pharmaceutical manufactures and healthcare providers, and state laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and often are not preempted by federal laws, thus complicating compliance efforts.
In the ordinary course of our business, we collect and store sensitive data, including intellectual property, our proprietary business information and that of our suppliers, as well as personally identifiable information of the patients using our commercially approved products, clinical trial participants and employees. Similarly, our third-party providers possess certain of our sensitive data.
In the ordinary course of our business, we collect and store sensitive data, including intellectual property, our proprietary business information and that of our suppliers, as well as personally identifiable information of the patients using our commercially - 67 - approved products, clinical trial participants and employees. Similarly, our third-party providers possess certain of our sensitive data.
The third parties are allowed to rely on the safety and efficacy data of the innovator’s product, may not need to conduct clinical trials and can market a competing version of a product after the expiration or loss of patent exclusivity or the expiration or loss of regulatory exclusivity and often charge significantly lower prices.
The third parties are allowed to rely on the safety and efficacy data of - 54 - the innovator’s product, may not need to conduct clinical trials and can market a competing version of a product after the expiration or loss of patent exclusivity or the expiration or loss of regulatory exclusivity and often charge significantly lower prices.
The Inflation Reduction Act among other things implements a corporate book minimum tax (“BMT”) 15% rate that could apply to consolidated groups of companies with adjusted financial statement income in excess of $1.0 billion over a three-year period.
The Inflation Reduction Act of 2022, among other things, implements a corporate book minimum tax (“BMT”) 15% rate that could apply to consolidated groups of companies with adjusted financial statement income in excess of $1.0 billion over a three-year period.
These cost containment measures may include, among other possible actions, implementation or modification of: • controls on government funded reimbursement for drugs; • caps or mandatory discounts under certain government sponsored programs; • challenges to the pricing of drugs or limits or prohibitions on reimbursement for specific products through other means; • reform of drug importation laws; • delegation of decision making to state Medicaid agencies and waiver of reimbursement requirements; • expansion of use of managed care systems in which healthcare providers contract to provide comprehensive healthcare for a fixed cost per person; and • prohibition on direct-to-consumer advertising or drug marketing practices.
These cost containment measures may include, among other possible actions, implementation or modification of: • controls on government funded reimbursement for drugs; • caps or mandatory discounts under certain government sponsored programs; • caps on drug reimbursement under commercial insurance; • challenges to the pricing of drugs or limits or prohibitions on reimbursement for specific products through other means; • reform of drug importation laws; • delegation of decision making to state Medicaid agencies and waiver of reimbursement requirements; • expansion of use of managed care systems in which healthcare providers contract to provide comprehensive healthcare for a fixed cost per person; and • prohibition on direct-to-consumer advertising or drug marketing practices.
Indeed, BioMarin has announced it is pursuing IND enabling studies for BMN-351, an oligonucleotide therapy. In addition, while Wave announced its intention to discontinue development of suvodirsen - 39 - and suspend development of WVE-N531, it has announced that it commenced clinical development for its exon 53 oligonucleotide, WVE-N531.
Indeed, BioMarin has announced it is pursuing IND enabling studies for BMN-351, an oligonucleotide therapy. In addition, while Wave announced its intention to discontinue development of suvodirsen and suspend development of WVE-N531, it has announced that it commenced clinical development for its exon 53 oligonucleotide, WVE-N531.
Failure by - 41 - Roche to meet its obligations under the collaboration agreement, to apply sufficient efforts at developing and commercializing collaboration products, or to comply with applicable legal or regulatory requirements, may materially adversely affect our business and our results of operations.
Failure by Roche to meet its obligations under the collaboration agreement, to apply sufficient efforts at developing and commercializing collaboration products, or to comply with applicable legal or regulatory requirements, may materially adversely affect our business and our results of operations.
In order to achieve our long-term business objectives, we actively evaluate various strategic opportunities on an ongoing basis, including licensing or acquiring products, technologies or businesses. We may face competition from other companies in - 40 - pursuing such opportunities.
In order to achieve our long-term business objectives, we actively evaluate various strategic opportunities on an ongoing basis, including licensing or acquiring products, technologies or businesses. We may face competition from other companies in pursuing such opportunities.
Within the CBER, the review of gene therapy and related products is consolidated in the Office of Cellular, Tissue and Gene Therapies, and the FDA has established - 47 - the Cellular, Tissue and Gene Therapies Advisory Committee to advise CBER on its reviews. The CBER works closely with the National Institutes of Health (the “NIH”).
Within the CBER, the review of gene therapy and related products is consolidated in the Office of Cellular, Tissue and Gene Therapies, and the FDA has established the Cellular, Tissue and Gene Therapies Advisory Committee to advise CBER on its reviews. The CBER works closely with the National Institutes of Health (the “NIH”).
Our efforts to comply with GDPR and other privacy and data protection laws imposes significant costs and challenges that are likely to increase over time, and we are exposed to substantial penalties or litigation related to violations of existing or future data privacy laws and regulations.
Our efforts to comply with GDPR, UK GDPR and other privacy and data protection laws imposes significant costs and challenges that are likely to increase over time, and we are exposed to substantial penalties or litigation related to violations of existing or future data privacy laws and regulations.
We may also face challenges to our patent and regulatory exclusivities covering our products by third parties, including manufacturers of generics and/or biosimilars who - 54 - may choose to launch or attempt to launch their products before the expiration of our patents or regulatory exclusivity.
We may also face challenges to our patent and regulatory exclusivities covering our products by third parties, including manufacturers of generics and/or biosimilars who may choose to launch or attempt to launch their products before the expiration of our patents or regulatory exclusivity.
We may also issue shares of common stock to finance our operations and in connection with our strategic goals. Exercise of these awards and sales of shares will dilute the interests of existing security holders and may depress the price of our common stock.
We may also issue shares of common stock to finance our operations and in connection with our strategic goals. The vesting and exercise of these awards and sales of shares will dilute the interests of existing security holders and may depress the price of our common stock.
Failure of other gene therapy programs, negative public opinion and increased regulatory scrutiny of gene therapy may damage public perception of the safety of our gene therapy product candidates and harm our ability to conduct our business or obtain regulatory approvals for our gene therapy product candidates.
Failure of other gene therapy programs, negative public opinion and increased regulatory scrutiny of gene therapy may damage public perception of the safety of ELEVIDYS or our gene therapy product candidates and harm our ability to conduct our business or obtain regulatory approvals for ELEVIDYS or our gene therapy product candidates.
In addition, the FDA, the EMA and other foreign regulatory authorities may require us to submit samples of any lot of any approved product together with the protocols showing the results of applicable tests at any time.
In addition, the FDA, the EMA and other foreign regulatory authorities may require us to submit samples of any approved product together with the protocols showing the results of applicable tests at any time.
These and other provisions in our certificate of incorporation and our bylaws and in the Delaware General Corporation Law could make it more difficult for stockholders or potential acquirers to obtain control of our board of directors or initiate actions that are opposed by the then-current board of directors. - 63 - A significant number of shares of our common stock are issuable pursuant to outstanding stock awards, and we expect to issue additional stock awards and shares of common stock to attract and retain employees, directors and consultants.
These and other provisions in our certificate of incorporation and our bylaws and in the Delaware General Corporation Law could make it more difficult for stockholders or potential acquirers to obtain control of our board of directors or initiate actions that are opposed by the then-current board of directors. - 64 - A significant number of shares of our common stock are issuable pursuant to outstanding stock awards, and we expect to issue additional stock awards and shares of common stock to attract and retain employees, directors and consultants.
Variations my result from one or more factors, including, without limitation: • timing of purchase orders; • changes in coverage and reimbursement policies of health plans and other health insurers, especially in relation to those products that are currently manufactured, under development or identified for future development by us; • re-authorizations processes that may be required for patients who initially obtained coverage by third parties, including government payors, managed care organizations and private health insurers; • transition from temporary billing codes established by the CMS to permanent medical codes; • timing of approval of applications filed with the FDA; - 62 - • timing of product launches and market acceptance of products launched; • changes in the amounts spent to research, develop, acquire, license or promote new and existing products; • results of clinical trial programs; • serious or unexpected health or safety concerns with our product or product candidates and any resulting clinical holds; • introduction of new products by others that render one or more of our products obsolete or noncompetitive; • the ability to maintain selling prices and gross margins on our products; • increases in the cost of raw materials contained within our products and product candidates; • manufacturing and supply interruptions, including product rejections or recalls due to failure to comply with manufacturing specifications; • timing of revenue recognition relating to our distribution agreements; • the ability to protect our intellectual property from being acquired by other entities; • the ability to avoid infringing the intellectual property of others; • the continued impact of the ongoing COVID-19 pandemic; and • the addition or loss of customers.
Variations may result from one or more factors, including, without limitation: • timing of purchase orders; • changes in coverage and reimbursement policies of health plans and other health insurers, especially in relation to those products that are currently manufactured, under development or identified for future development by us; • re-authorizations processes that may be required for patients who initially obtained coverage by third parties, including government payors, managed care organizations and private health insurers; • transition from temporary billing codes established by the CMS to permanent medical codes; • timing of approval of applications filed with the FDA; - 63 - • timing of product launches and market acceptance of products launched; • changes in the amounts spent to research, develop, acquire, license or promote new and existing products; • results of clinical trial programs; • serious or unexpected health or safety concerns with our product or product candidates and any resulting clinical holds; • introduction of new products by others that render one or more of our products obsolete or noncompetitive; • the ability to maintain selling prices and gross margins on our products; • increases in the cost of raw materials contained within our products and product candidates; • manufacturing and supply interruptions, including product rejections or recalls due to failure to comply with manufacturing specifications; • timing of revenue recognition relating to our distribution agreements; • the ability to protect our intellectual property from being acquired by other entities; • the ability to avoid infringing the intellectual property of others; • the impact of COVID-19; and • the addition or loss of customers.
We may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default on our debt obligations, and limit our flexibility in planning for and reacting to changes in our business. - 64 - We may not have the ability to raise the funds necessary to repurchase the Notes as required upon a fundamental change, and our future debt may contain limitations on our ability to repurchase the Notes.
We may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default on our debt obligations, and limit our flexibility in planning for and reacting to changes in our business. - 65 - We may not have the ability to raise the funds necessary to repurchase the Notes as required upon a fundamental change, and our future debt may contain limitations on our ability to repurchase the Notes.
More restrictive government regulations or negative public opinion would harm our business, financial condition, results of operations and prospects and may delay or impair the development and commercialization of our gene therapy product candidates or demand for any products we may develop. For example, earlier gene therapy trials led to several well-publicized adverse events, including death.
More restrictive government regulations or negative public opinion would harm our business, financial condition, results of operations and prospects and may delay or impair the development and commercialization of our gene therapy product candidates or demand ELEVIDYS or any other products we may develop. For example, earlier gene therapy trials led to several well-publicized adverse events, including death.
Even if we believe we have sufficient funds for our current or future operating plans, we may seek additional capital if market conditions are favorable or in light of specific strategic considerations. - 60 - Any additional fundraising efforts may divert our management from their day-to-day activities, which may adversely affect our ability to develop and commercialize our product candidates.
Even if we believe we have sufficient funds for our current or future operating plans, we may seek additional capital if market conditions are favorable or in light of specific strategic considerations. - 61 - Any additional fundraising efforts may divert our management from their day-to-day activities, which may adversely affect our ability to develop and commercialize our product candidates.
If we lose the services of one or more of our senior management or key employees, or if one or more of them decides to join a competitor or otherwise to compete with us, our business could be harmed. - 59 - Risks Related to our Financial Condition and Capital Requirements We have incurred operating losses since our inception and we may not achieve or sustain profitability.
If we lose the services of one or more of our senior management or key employees, or if one or more of them decides to join a competitor or otherwise to compete with us, our business could be harmed. - 60 - Risks Related to our Financial Condition and Capital Requirements We have incurred operating losses since our inception and we may not achieve or sustain profitability.
Gene therapy remains a newly applied technology, with only a few gene therapy products approved to date in the U.S., the EU or elsewhere. Public perception may be influenced by claims that gene therapy is unsafe, and gene therapy may not gain the acceptance of the public or the medical community.
Gene therapy remains a newly applied technology, with only a few gene therapy products approved to date in the U.S., the EU or elsewhere, including ELEVIDYS. Public perception may be influenced by claims that gene therapy is unsafe, and gene therapy may not gain the acceptance of the public or the medical community.
Any significant impairment of our ability to sell products outside of the U.S. could adversely impact our business and financial results. We rely significantly on information technology and any failure, inadequacy, interruption or security lapse of that technology, including any cyber security incidents, could harm our ability to operate our business effectively.
Any significant impairment of our ability to sell products outside of the U.S. could adversely impact our business and financial results. We rely significantly on information technology and any failure, inadequacy, interruption or security lapse of that technology, including any cybersecurity incidents, could harm our ability to operate our business effectively.
The extent to which COVID-19 impacts our operations and those of our third-party partners will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration of the pandemic, additional or modified government actions, new information which emerges concerning the severity of COVID-19 and the actions taken to contain the virus or treat its impact, among others.
The extent to which COVID-19 impacts our operations and those of our third-party partners will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including resurgences of COVID-19, additional or modified government actions, new information which emerges concerning the severity of COVID-19 and the actions taken to contain the virus or treat its impact, among others.
These actions have and may continue to negatively impact commercialization, clinical trials, manufacturing and other business operations, including: • Commercial: The response to COVID-19 by healthcare providers has made it difficult for some patients, especially those dependent on a hospital setting, to receive infusions or initiate treatment with our commercial products.
These actions have and may in the future negatively impact commercialization, clinical trials, manufacturing and other business operations, including: • Commercial: The response to COVID-19 by healthcare providers has made it difficult for some patients, especially those dependent on a hospital setting, to receive infusions or initiate treatment with our commercial products.
As our product candidates advance to later stage clinical trials, it is customary that various aspects of the development program, such as manufacturing, formulation and other processes, and methods of administration, may be altered to optimize the candidates and processes for scale-up necessary for later stage clinical trials and potential approval and commercialization.
As our product candidates advance to later stage clinical trials, it is customary that various CMC aspects of the development program, such as manufacturing, formulation and other processes, and route of administration, may be altered to optimize the candidates and processes for scale-up necessary for later stage clinical trials and potential approval and commercialization.
Broad market and industry factors may seriously affect the market price of a company’s stock, including ours, regardless of actual operating performance. For example, the trading prices of biopharmaceutical companies have been highly volatile as a result of the COVID-19 pandemic, inflation and increased interest rates and overall market volatility.
Broad market and industry factors may seriously affect the market price of a company’s stock, including ours, regardless of actual operating performance. For example, the trading prices of biopharmaceutical companies have been highly volatile as a result of inflation and increased interest rates and overall market volatility.
Our ability to refinance the 2024 Notes, which are non-callable and mature in 2024, and the 2027 Notes, which mature in 2027, will depend on the capital markets and our financial condition at such times.
Our ability to refinance the remaining outstanding 2024 Notes, which are non-callable and mature in 2024, and the 2027 Notes, which mature in 2027, will depend on the capital markets and our financial condition at such times.
Problems with the manufacturing process, even minor deviations from the normal process, could result in product defects or manufacturing failures that result in lot failures, product recalls, product liability claims or insufficient inventory.
Problems with the manufacturing process, even minor deviations from the normal process, could result in delay in product release, product defects or manufacturing failures that result in lot failures, product recalls, product liability claims or insufficient inventory.
The GDPR increases our obligations with respect to clinical trials conducted in the member states of the EEA by expanding the definition of personal data to include coded data and requiring changes to informed consent practices and more detailed notices for clinical trial subjects and investigators.
The GDPR and UK GDPR increase our obligations with respect to clinical trials conducted in the member states of the EEA and the UK by expanding the definition of personal data to include coded data and requiring changes to informed consent practices and more detailed notices for clinical trial subjects and investigators.
For example, we will have limited influence and control over the development and commercialization activities of Roche in the territories in which it leads development and commercialization of SRP-9001, and if the exclusive option is exercised, in the territories in which it may lead commercialization of certain other products or product candidates.
For example, we will have limited influence and control over the development and commercialization activities of Roche in the territories in which it leads development and commercialization of ELEVIDYS, and if the exclusive option is exercised, in the territories in which it may lead commercialization of certain other products or product candidates.
We have entered into multiple collaborations, including with Roche, Nationwide, Duke University, Genethon, University of Florida, Genevant Sciences, Dyno Therapeutics, Selecta Biosciences, and Hansa Biopharma.
We have entered into multiple collaborations, including with Roche, Nationwide, Duke University, Genethon, University of Florida, Genevant Sciences, Dyno Therapeutics, and Hansa Biopharma.
Responses to COVID-19 by healthcare providers and regulatory agencies could delay the commencement of clinical trials, site - 44 - initiation, protocol compliance, or the completion of clinical trials, including the completion of post-marketing requirements and commitments, slow down enrollment, and make the ongoing collection of data for patients enrolled in studies more difficult or intermittent.
Responses to resurgence of infection rates of COVID-19 by healthcare providers and regulatory agencies could delay the commencement of clinical trials, site initiation, protocol compliance, or the completion of clinical trials, including the completion of post-marketing requirements and commitments, slow down enrollment, and make the ongoing collection of data for patients enrolled in studies more difficult or intermittent.
The degree of market acceptance of our products depends on a number of factors, including: • our ability to demonstrate to the medical and payor community, including specialists who may purchase or prescribe our products, the clinical efficacy, effectiveness and safety of our products as the prescription products of choice for their respective indications; • the effectiveness of our sales and marketing organizations and distribution networks; • the ability of patients or providers to be adequately reimbursed for our products in a timely manner from government and private payors; • the ability to timely demonstrate to the satisfaction of payors real world effectiveness and the economic, humanistic and societal benefits of our products; • the actual and perceived efficacy and safety profile of our products, particularly if unanticipated adverse events related to our products’ treatment arise and create safety concerns among potential patients or prescribers or if new data and analyses we obtain for our products do not support, or are interpreted by some parties to not support, the efficacy of our products; and • the efficacy and safety of our other exon-skipping and gene therapy product candidates and third parties’ competitive therapies.
The degree of market acceptance of our products depends on a number of factors, including: • our ability to demonstrate to the medical and payor community, including specialists who may purchase or prescribe our products, the clinical efficacy, effectiveness and safety of our products as the prescription products of choice for their respective indications; • the effectiveness of our sales and marketing organizations and distribution networks; • the ability of patients or providers to be adequately reimbursed for our products in a timely manner from government and private payors; • the ability to timely demonstrate to the satisfaction of payors real world effectiveness and the economic, humanistic and societal benefits of our products; • the burden or efficiency of payer prior authorization processes and the ability of families and physicians to navigate them; • the actual and perceived efficacy and safety profile of our products, particularly if unanticipated adverse events related to our products’ treatment arise and create safety concerns among potential patients or prescribers or if new data and analyses we obtain for our products do not support, or are interpreted by some parties to not support, the efficacy of our products; and • the efficacy and safety of our other exon-skipping and gene therapy product candidates and third parties’ competitive therapies.
Clinical trials of our novel gene therapy candidates may be delayed, including as a result of the COVID-19 pandemic, and certain programs may never advance in the clinic or may be more costly to conduct than we anticipate, any of which could have a material adverse impact on our business.
Clinical trials of our novel gene therapy candidates may be delayed, including as a result of a resurgence in COVID-19, or other similar pandemic, infection rates, and certain programs may never advance in the clinic or may be more costly to conduct than we anticipate, any of which could have a material adverse impact on our business.
Due to the nature of our products and product candidate pipeline, in addition to NCE exclusivity and new biologic exclusivity, orphan drug exclusivity is especially important for our products that are eligible for orphan drug designation. For eligible products, we plan to rely on orphan drug exclusivity to maintain a competitive position.
Due to the nature of our products and product candidate pipeline, in addition to new chemical entity (“NCE”) exclusivity and new biologic exclusivity, orphan drug exclusivity is especially important for our products that are eligible for orphan drug designation. For eligible products, we plan to rely on orphan drug exclusivity to maintain a competitive position.
In addition, the GDPR increases the scrutiny that clinical trial sites located in the EEA should apply to transfers of personal data from such sites to countries that are considered to lack an adequate level of data protection, such as the U.S.
In addition, the GDPR and the UK GDPR increase the scrutiny that clinical trial sites located in the EEA and UK should apply to transfers of personal data from such sites to countries that are considered to lack an adequate level of data protection, such as the U.S.
Failure to comply with these regulations is subject to civil sanctions, including fines and penalties. The CCPA provides for civil penalties for violations, as well as a private right of action for data breaches that is expected to increase data breach litigation.
Failure to comply with these requirements is subject to civil sanctions, including fines and penalties. The CPA provides for civil penalties for violations, as well as a private right of action for data breaches that is expected to increase data breach litigation.
Of the large number of drugs in development in the biopharmaceutical industry, only a small percentage result in the submission of a marketing application to the FDA or an MAA to the EMA and even fewer are approved for commercialization.
Of the large number of drugs in development in the biopharmaceutical industry, only a small percentage result in the submission of a marketing application to the FDA or an MAA to the EMA (or NCA of an EU member state) and even fewer are approved for commercialization.
The estimates and judgments we make, or the assumptions on which we rely, in preparing our consolidated financial statements could prove inaccurate. Our consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the U.S.
The estimates and judgments we make, or the assumptions on which we rely, in preparing our consolidated financial statements and condensed consolidated financial statements could prove inaccurate. Our consolidated financial statements and condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the U.S.
Lack of efficacy and/or serious adverse events related to clinical trials we, our strategic partners or other companies conduct, even if such adverse events are not ultimately attributable to the relevant product candidates or products, and/or failed commercialization of gene therapy products may result in increased government regulation, unfavorable public perception, potential regulatory delays in the testing or approval of our product candidates, stricter labeling requirements for those product candidates that are approved and a decrease in demand for any such product candidates.
Lack of efficacy and/or serious adverse events related to clinical trials we, our strategic partners or other companies conduct, even if such adverse events are not ultimately attributable to the relevant product candidates or products, and/or failed commercialization of gene therapy products may result in increased government regulation, unfavorable public perception, potential regulatory delays in the testing or approval of our product candidates, stricter labeling requirements for those product candidates that are approved and a decrease in demand for any such product candidates. - 36 - We may not be able to expand the global footprint of our products outside of the U.S.
For example, quarantines or other travel limitations (whether voluntary or required) were implemented in many countries during the pandemic, and may impede participant movement, affect sponsor access to study sites, or interrupt healthcare services, which may negatively impact the execution of clinical trials.
Quarantines and other travel limitations (whether voluntary or required) were implemented in many countries during the pandemic, and any future mitigation measures may impede participant movement, affect sponsor access to study sites, or interrupt healthcare services, which may negatively impact the execution of clinical trials.
The disaster recovery and business continuity plans we have in place may prove inadequate in the event of a serious disaster or similar event. We may incur substantial expenses as a result of the limited nature of our disaster recovery and business continuity plans, which could have a material adverse effect on our business.
The disaster recovery and business continuity plans we have in place may prove inadequate in the event of a serious disaster or similar event. We may incur substantial expenses as a result of the limited nature of our disaster recovery and business continuity plans, which could have a material adverse effect on our business. Item 1B. Un resolved Staff Comments.
Currently, our Amended and Restated Certificate of Incorporation authorizes the issuance of up to 198.0 million shares of common stock. As of December 31, 2022, there were approximately 88.0 million shares of common stock outstanding and outstanding awards to purchase 11.0 million shares of common stock under various incentive stock plans.
Currently, our Amended and Restated Certificate of Incorporation authorizes the issuance of up to 198.0 million shares of common stock. As of December 31, 2023, there were approximately 93.7 million shares of common stock outstanding and outstanding awards to purchase 11.8 million shares of common stock under various incentive stock plans.
Compliance with these directives will be a rigorous and time-intensive process that may increase our cost of doing business, and despite those efforts, there is a risk that we may be subject to fines and penalties, litigation and reputational harm in connection with our European activities.
Compliance with these directives is a rigorous and time-intensive process that requires review and updates that may increase our cost - 66 - of doing business, and despite those efforts, there is a risk that we may be subject to fines and penalties, litigation and reputational harm in connection with our European and U.K. activities.
For example, our most recent announcements for SRP-9001, SRP-9003 and SRP-5051 include: in July 2022, we announced additional data and analyses from Study 102 and Study 103 for SRP-9001; in May 2021, we announced results from the 30 mg/kg cohort of Part A of Study 5051-201 for SRP-5051; and in March 2022, we announced 24-month functional data from two clinical trial participants in the high-dose cohort, and 36-month functional data from three clinical trial participants in the low-dose cohort for SRP-9003.
For example, recent announcements for SRP-9003 and SRP-5051 include: in May 2021, we announced results from the 30 mg/kg cohort of Part A of Study 5051-201 for SRP-5051; and in March 2022, we announced 24-month functional data from two clinical trial participants in the high-dose cohort, and 36-month functional data from three clinical trial participants in the low-dose cohort for SRP-9003.
As our revenue from countries outside of the United States increases, our access to patients in that region through our EAP and our ability to generate revenue from commercial sales of our products in Russia or Ukraine may be adversely affected.
As our revenue from countries outside of the United States increases, our access to patients in those regions through our EAP and our ability to generate revenue from commercial sales of our products in Russia, Ukraine or the Middle East may be adversely affected.
If our products, product candidates, or platform technologies are alleged to infringe or are determined to infringe enforceable proprietary rights of others, we could incur substantial costs and may have to: • obtain rights or licenses from others, which might not be available on commercially reasonable terms or at all; • abandon development of an infringing product candidate, or cease commercialization of an infringing product; • redesign our products, product candidates or processes to avoid infringement; • pay damages; and/or • defend litigation or administrative proceedings which might be costly whether we win or lose, and which could result in a substantial diversion of financial and management resources. - 55 - Any of these events could result in product and product candidate development delays or cessation, and as such substantially harm our potential earnings, financial condition and operations.
If our products, product candidates, or platform technologies are alleged to infringe or are determined to infringe enforceable proprietary rights of others, we could incur substantial costs and may have to: • obtain rights or licenses from others, which might not be available on commercially reasonable terms or at all; • abandon development of an infringing product candidate, or cease commercialization of an infringing product; • redesign our products, product candidates or processes to avoid infringement; • pay damages; and/or • defend litigation or administrative proceedings which might be costly whether we win or lose, and which could result in a substantial diversion of financial and management resources.
The U.S. government, state legislatures and foreign governments have shown significant interest in implementing cost-containment programs to limit the growth of government-paid healthcare costs, including proposed or implemented reforms involving price controls, waivers from Medicaid drug rebate law requirements, restrictions on reimbursement and requirements for substitution of generic products for branded prescription drugs and the introduction of international reference pricing in the U.S.
The U.S. government, state legislatures and foreign governments have shown significant interest in implementing cost-containment programs to limit the growth of government-paid and private insurance healthcare costs, including proposed or implemented reforms involving price controls, waivers from Medicaid drug rebate law requirements, restrictions on reimbursement and requirements for substitution of generic products for branded prescription drugs and implementing new requirements for, or eliminating caps on, rebates paid on products under government healthcare programs.
Factors that may inhibit our efforts to maintain and further develop commercial capabilities include: • an inability to retain an adequate number of effective commercial personnel; • an inability to train sales personnel, who may have limited experience with our company or our products, to deliver a consistent message regarding our products and be effective in educating physicians on how to prescribe our products; • an inability to equip sales personnel with compliant and effective materials, including medical and sales literature to help them educate physicians and our healthcare providers regarding our products and their proper administration and educate payors on the safety, efficacy and effectiveness profile of our products to support favorable coverage decisions; • unforeseen costs and expenses associated with maintaining and further developing an independent sales and marketing organization; and • restrictions on the ability of our employees to perform their jobs due to the COVID-19 pandemic, such as quarantines and self-isolations.
Factors that may inhibit our efforts to maintain and further develop commercial capabilities include: • an inability to retain an adequate number of effective commercial personnel; • an inability to train sales personnel, who may have limited experience with our company or our products, to deliver a consistent message regarding our products and be effective in educating physicians on how to prescribe our products; • an inability to equip sales personnel with compliant and effective materials, including medical and sales literature to help them educate physicians and our healthcare providers regarding our products and their proper administration and educate payors on the safety, efficacy and effectiveness profile of our products to support favorable coverage decisions; • unforeseen costs and expenses associated with maintaining and further developing an independent sales and marketing organization; and • an inability to develop effective commercial, sales and marketing infrastructure to support new product launches.
Our contract manufacturers are required to produce our materials, APIs and drug products under cGMP. We and our contract manufacturers are subject to periodic inspections by the FDA, EMA and corresponding state and foreign authorities to ensure strict compliance with cGMP and other applicable government regulations.
We and our contract manufacturers are subject to periodic inspections by the FDA, EMA and corresponding state and foreign authorities to ensure strict compliance with cGMP and other applicable government regulations.
For products that receive a priority review designation, the FDA's marketing application review goal is shortened to six months, as opposed to ten months under standard review.
For products that receive a priority review designation, the FDA's marketing application review goal is shortened to six months, as opposed to ten months under standard review. This review goal is based on the date the FDA accepts the marketing application for review.
The response to COVID-19 by healthcare providers and regulatory agencies could delay the commencement of trials, site initiation, compliance in the trials, the completion of trials, including the completion of post-marketing requirements and commitments, slow down enrollment, and make the ongoing collection of data for patients enrolled in studies more difficult or intermittent.
A resurgence of COVID-19 could delay the commencement of trials, site initiation, compliance in the trials, the completion of trials, including the completion of post-marketing requirements and commitments, slow down enrollment, and make the ongoing collection of data for patients enrolled in studies more difficult or intermittent.
If we are unable to effectively manage the distribution process, the sales of our products, as well as any future products we may commercialize, could be delayed or severely compromised and our results of operations may be harmed. - 49 - In addition, the use of third parties involves certain risks, including, but not limited to, risks that these organizations will: • not provide us with accurate or timely information regarding their inventories, the number of patients who are using our products or serious adverse events and/or product complaints regarding our products; • not effectively sell or support our products; • reduce or discontinue their efforts to sell or support our products; • not devote the resources necessary to sell our products in the volumes and within the time frame we expect; • be unable to satisfy financial obligations to us or others; or • cease operations.
In addition, the use of third parties involves certain risks, including, but not limited to, risks that these organizations will: • not provide us with accurate or timely information regarding their inventories, the number of patients who are using our products or serious adverse events and/or product complaints regarding our products; • not effectively sell or support our products; • reduce or discontinue their efforts to sell or support our products; • not devote the resources necessary to sell our products in the volumes and within the time frame we expect; • be unable to satisfy financial obligations to us or others; or • cease operations.
We incurred an operating loss of $536.2 million for the year ended December 31, 2022. Our accumulated deficit was $3.9 billion as of December 31, 2022. Although we currently have three commercially approved products in the U.S., we believe that it will take us some time to attain profitability and positive cash flow from operations.
We incurred an operating loss of $267.8 million for the year ended December 31, 2023. Our accumulated deficit was $4.4 billion as of December 31, 2023. Although we currently have four commercially approved products in the U.S., we believe that it will take us some time to maintain profitability and positive cash flow from operations.
Court of Appeals for the Eleventh Circuit in Catalyst Pharmaceuticals, Inc. vs. Becerra regarding interpretation of the Orphan Drug Act’s exclusivity provisions as applied to drugs and biologics approved for orphan indications narrower than the product’s orphan designation has the potential to significantly broaden the scope of orphan exclusivity for such products.
Becerra regarding interpretation of the Orphan Drug Act’s exclusivity provisions as applied to drugs and biologics approved for orphan indications narrower than the product’s orphan designation has the potential to significantly broaden the scope of orphan exclusivity for such products.
Additionally, as of December 31, 2022, there were approximately 4.9 million shares of common stock available for future issuance under our 2018 Equity Incentive Plan, approximately 0.2 million shares of common stock available for issuance under our Amended and Restated 2013 Employee Stock Purchase Plan, and approximately 0.8 million shares of common stock available for issuance under our 2014 Employment Commencement Incentive Plan.
Additionally, as of December 31, 2023, there were approximately 5.1 million shares of common stock available for future issuance under our 2018 Equity Incentive Plan, approximately 0.3 million shares of common stock available for issuance under our Amended and Restated 2013 Employee Stock Purchase Plan, and approximately 0.6 million shares of common stock available for issuance under our 2014 Employment Commencement Incentive Plan.
These challenges may continue for the duration of the COVID-19 pandemic, which is uncertain, and are expected to reduce our revenue and cash flows. • Clinical trials: The impact of COVID-19 has caused disruptions and may cause delays in some of our clinical trials. Missing data could undermine data integrity and probability of success.
These challenges may continue for the foreseeable future, which is expected to reduce our revenue and cash flows. - 58 - • Clinical trials: The impact of COVID-19 has caused disruptions and delays in some of our clinical trials, and may in the future disrupt or delay our clinical trials. Missing data could undermine data integrity and probability of success.
In response to the pandemic, healthcare providers have, and may need to further, reallocate resources, such as physicians, staff, hospital beds, and intensive care unit facilities, as they prioritize limited resources and personnel capacity to focus on the treatment of patients with COVID-19 and implement limitations on access to hospitals and other medical institutions due to concerns about the spread of COVID-19 in such settings.
In response to the pandemic, healthcare providers have reallocated, and may need to further, reallocate, limited resources and personnel capacity to focus on the treatment of patients with COVID-19 and implement limitations on access to hospitals and other medical institutions due to concerns about the spread of COVID-19 in such settings.
We anticipate that the U.S. Congress, state legislatures and the private sector will continue to consider and may adopt healthcare policies intended to curb rising healthcare costs.
We anticipate that the Biden Administration and Congress, state legislatures and the private sector will continue to consider and may adopt healthcare policies intended to curb rising healthcare costs, and specifically prescription drug costs.
For example, the exclusivity period for EXONDYS 51 will end in September 2023. Orphan drug designation neither shortens the development time or regulatory review time of a drug, nor gives the drug any advantage in the regulatory review or approval process. A recent decision in 2021 by the U.S.
For example, the exclusivity period for EXONDYS 51 ended September 2023. Orphan drug designation neither shortens the development time or regulatory review time of a drug, nor gives the drug any advantage in the regulatory review or approval process. A recent decision in 2021 by the U.S. Court of Appeals for the Eleventh Circuit in Catalyst Pharmaceuticals, Inc. vs.
If a successful product liability claim or series of claims is brought against us for uninsured liabilities or in excess of insured liabilities, our assets may not be sufficient to cover such claims and our business operations could be impaired.
If a successful product liability claim or series of claims is brought against us for uninsured liabilities or in excess of insured liabilities, our assets may not be sufficient to cover such claims and our business operations could be impaired. Violation of the General Data Protection Regulation or UK GDPR could subject us to significant fines.
The individuals at our third-party collaborators and CROs who conduct work on our behalf, including their sub-contractors, are not always our employees, and although we participate in the planning of our early stage research and pre-clinical and clinical programs, we cannot control whether or not they devote sufficient time and resources or exercise appropriate oversight of these programs, except for remedies available to us under our agreements with such third parties.
Nevertheless, we are responsible for ensuring that each of our studies is conducted in accordance with the applicable protocol and legal, regulatory and scientific standards, and our reliance on collaborators and CROs does not relieve us of our regulatory responsibilities. - 50 - The individuals at our third-party collaborators and CROs who conduct work on our behalf, including their sub-contractors, are not always our employees, and although we participate in the planning of our early stage research and pre-clinical and clinical programs, we cannot control whether or not they devote sufficient time and resources or exercise appropriate oversight of these programs, except for remedies available to us under our agreements with such third parties.
The GDPR imposes substantial fines for breaches of data protection requirements, which can be up to four percent of global revenue or 20 million Euros, whichever is greater, and it also confers a private right of action on data subjects for breaches of data protection requirements.
The GDPR and UK GDPR impose substantial fines for breaches of data protection requirements, which can be up to four percent of global revenue or 20 million Euros (£17.5 million in the U.K.), whichever is greater, and they also confer a private right of action on data subjects for breaches of data protection requirements.
The CCPA requires new disclosures to California consumers, imposes new rules for collecting or using information about minors, and affords consumers new abilities, such as the right to know whether the data is sold or disclosed and to whom, the right to request that a company delete personal information collected, the right to opt-out of the sale of personal information and the right to non-discrimination in terms of price or service when a consumer exercises a privacy right.
The CPA requires disclosures to California consumers, imposes rules around collecting or using information about minors, and affords consumers with privacy rights such as the right to know whether the data is sold or disclosed and to whom, the right to request that a company delete personal information collected, the right to correct inaccurate information, the right to limit the use of sensitive information, the right to opt-out of the sale of personal information or sharing of personal information for cross-context behavioral advertising, and the right to non-discrimination in terms of price or service when a consumer exercises a privacy right.
Failure to secure the intellectual property rights required for the manufacturing process needed for large-scale clinical trials or the continued development of our product candidates could cause significant delays in our business plans or otherwise negatively impact the continued development of our product candidates. - 52 - Products intended for use in gene therapies are novel, complex and difficult to manufacture.
Failure to secure the intellectual property rights required for the manufacturing process needed for large-scale clinical trials or the continued development of our product candidates could cause significant delays in our business plans or otherwise negatively impact the continued development of our product candidates.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThese products are subject to ongoing FDA requirements governing labeling, packaging, storage, advertising, promotion and recordkeeping, and we are required to submit additional safety, efficacy and other post-marketing information to the FDA. Under the accelerated approval pathway, continued approval may be contingent upon verification of a clinical benefit in confirmatory trials.
Biggest changeThe accelerated approval for ELEVIDYS granted by the FDA was based on an effect on the surrogate endpoint of expression of the protein produced by ELEVIDYS. These products are subject to ongoing FDA requirements governing labeling, packaging, storage, advertising, promotion and recordkeeping, and we are required to submit additional safety, efficacy and other post-marketing information to the FDA.
If we or the manufacturing facilities for our products fail to comply with applicable regulatory requirements, a regulatory agency may: • issue warning letters or untitled letters; • seek an injunction or impose civil or criminal penalties or monetary fines; • suspend or withdraw or alter the conditions of our marketing approval; • mandate modifications to promotional materials or require us to provide corrective information to healthcare practitioners; • suspend any ongoing clinical trials; • require us to enter into a consent decree, which can include imposition of various fines, reimbursements for inspection costs, required due dates for specific actions and penalties for noncompliance; - 33 - • refuse to approve pending applications or supplements to applications submitted by us; • suspend or impose restrictions on operations, including costly new manufacturing requirements; • seize or detain products, refuse to permit the import or export of products or require us to initiate a product recall; or • refuse to allow us to enter into supply contracts, including government contracts.
If we or the manufacturing facilities for our products fail to comply with applicable regulatory requirements, a regulatory agency may: • issue warning letters or untitled letters; • seek an injunction or impose civil or criminal penalties or monetary fines; • suspend or withdraw or alter the conditions of our marketing approval; - 33 - • mandate modifications to promotional materials or require us to provide corrective information to healthcare practitioners; • suspend any ongoing clinical trials; • require us to enter into a consent decree, which can include imposition of various fines, reimbursements for inspection costs, required due dates for specific actions and penalties for noncompliance; • refuse to approve pending applications or supplements to applications submitted by us; • suspend or impose restrictions on operations, including costly new manufacturing requirements; • seize or detain products, refuse to permit the import or export of products or require us to initiate a product recall; or • refuse to allow us to enter into supply contracts, including government contracts.
The commercial success of our products continues to depend on a number of factors attributable to one of our products or the products of our competitors, including, but not limited to: • the effectiveness of our sales, managed markets, marketing efforts and support for our products; • the generation and dissemination of new data analyses and the consistency of any new data with prior results, whether they support a favorable safety, efficacy and effectiveness profile of our products and any potential impact on our FDA accelerated approval status and/or FDA package insert for our products; • the effectiveness of our ongoing commercialization activities, including negotiating and entering into any additional commercial, supply and distribution contracts, ongoing manufacturing efforts and hiring any additional personnel as needed to support commercial efforts; • our ability to timely comply with FDA post-marketing requirements and commitments, including through successfully conducting additional studies that confirm clinical efficacy, effectiveness and safety of our products and acceptance of the same by the FDA and medical community since continued approval may be contingent upon verification of a clinical benefit in confirmatory trials, particularly in light of FDA's expanded expedited withdrawal procedures as set forth in FDORA; • the occurrence of any side effects, adverse reactions or misuse, or any unfavorable publicity in these areas; • the generation of evidence describing payers, patients and/or societal value of our products; • whether we can consistently manufacture our products and product candidates at acceptable costs; • the rate and consistency with which our products are prescribed by physicians, which depends on physicians’ views on the safety, effectiveness and efficacy of our products; • our ability to secure and maintain adequate reimbursement for our products, including the duration of the prior-authorization as well as the number and duration of re-authorization processes required for patients who initially obtained coverage by third parties, including by government payors, managed care organizations and private health insurers; • our ability to obtain and maintain patent protection for our products, to preserve our trade secrets, to prevent third parties from infringing on our proprietary rights and to operate without infringing on the proprietary rights of third parties; • the development, commercialization or pricing of competing products or therapies for the treatment of Duchenne, or its symptoms, and the existence of competing clinical trials; • our ability to increase awareness of the importance of genetic testing and knowing/understanding Duchenne mutations, and identifying and addressing procedural barriers to obtaining therapy; • our ability to remain compliant with laws and regulations that apply to us and our commercial activities; • the actual market-size, ability to identify patients and the demographics of patients eligible for our products, which may be different than expected; • the sufficiency of our drug supply to meet commercial and clinical demands and standards, which are negatively impacted by various factors, including when our projections on the potential number of amenable patients and their average weight are - 32 - inaccurate; the potential impacts of the COVID-19 pandemic; if regulatory requirements increase our drug supply needs; if our current drug supply is destroyed or negatively impacted at our manufacturing sites, storage sites or in transit; failure to meet cGMP requirements; or if we encounter delays expanding the number of patients on our products and portions of our products’ supply expire before sale; • our ability to obtain regulatory approvals to commercialize our product candidates, and to commercialize our products in markets outside of the U.S.; • the process leading to a patient’s first infusion of our products may be slower for certain patients.
The commercial success of our products continues to depend on, and the commercial success of any future products would depend on, a number of factors attributable to one of our products or the products of our competitors, including, but not limited to: • the effectiveness of our sales, managed markets, marketing efforts and support for our products; • the generation and dissemination of new data analyses and the consistency of any new data with prior results, whether they support a favorable safety, efficacy and effectiveness profile of our products and any potential impact on our FDA accelerated approval status and/or FDA package insert for our products; • the effectiveness of our ongoing commercialization activities, including negotiating and entering into any additional commercial, supply and distribution contracts, ongoing manufacturing efforts and hiring any additional personnel as needed to support commercial efforts; • our ability to timely comply with FDA post-marketing requirements and commitments, including through successfully conducting additional studies that confirm clinical efficacy, effectiveness and safety of our products and acceptance of the same by the FDA and medical community since continued approval may be contingent upon verification of a clinical benefit in confirmatory trials, particularly in light of FDA's expanded expedited withdrawal procedures as set forth in FDORA; • the occurrence of any side effects, adverse reactions or misuse, or any unfavorable publicity in these areas; • the generation of evidence describing payers, patients and/or societal value of our products; • whether we can consistently manufacture our products and product candidates at acceptable costs; • the rate and consistency with which our products are prescribed by physicians, which depends on physicians’ views on the safety, effectiveness and efficacy of our products; • our ability to secure and maintain adequate reimbursement for our products, including the duration of the prior-authorization as well as the number and duration of re-authorization processes required for patients who initially obtained coverage by third parties, including by government payors, managed care organizations and private health insurers; • our ability to obtain and maintain patent protection for our products, to preserve our trade secrets, to prevent third parties from infringing on our proprietary rights and to operate without infringing on the proprietary rights of third parties; • the development, commercialization or pricing of competing products or therapies for the treatment of Duchenne, or its symptoms, and the existence of competing clinical trials; • our ability to increase awareness of the importance of genetic testing and knowing/understanding Duchenne mutations, and identifying and addressing procedural barriers to obtaining therapy; • our ability to remain compliant with laws and regulations that apply to us and our commercial activities; - 32 - • the actual market-size, ability to identify patients and the demographics of patients eligible for our products, which may be different than expected; • the sufficiency of our drug supply to meet commercial and clinical demands and standards, which are negatively impacted by various factors, including when our projections on the potential number of amenable patients and their average weight are inaccurate; the potential impacts of the COVID-19 pandemic; if regulatory requirements increase our drug supply needs; if our current drug supply is destroyed or negatively impacted at our manufacturing sites, storage sites or in transit; failure to meet cGMP requirements; or if we encounter delays expanding the number of patients on our products and portions of our products’ supply expire before sale; • our ability to obtain regulatory approvals to commercialize our product candidates, and to commercialize our products in markets outside of the U.S.; • the process leading to a patient’s first infusion of our products and any future commercial products may be slower for certain patients.
Current reimbursement models may not accommodate the unique factors of our gene therapy product candidates, including high up-front costs, lack of long-term efficacy and safety data and - 34 - fees associated with complex administration, dosing and patient monitoring requirements. Hence, it may be necessary to restructure approaches to payment, pricing strategies and traditional payment models to support these therapies.
Current reimbursement models may not accommodate the unique factors of our gene therapy product and product candidates, including high up-front costs, lack of long-term efficacy and safety data and fees associated with complex administration, dosing and patient monitoring requirements. Hence, it may be necessary to restructure approaches to payment, pricing strategies and traditional payment models to support these therapies.
Failure to meet post-approval commitments and requirements, including completion of enrollment and in particular, any failure to obtain positive safety and efficacy data from our ongoing and planned studies of our products, would lead to negative regulatory action from the FDA and/or withdrawal of regulatory approval of EXONDYS 51, VYONDYS 53 or AMONDYS 45.
Failure to meet post-approval commitments and requirements, including completion of enrollment and in particular, any failure to obtain positive safety and efficacy data from our ongoing and planned studies of our products, would lead to negative regulatory action from the FDA and/or withdrawal of regulatory approval of EXONDYS 51, VYONDYS 53, AMONDYS 45 or ELEVIDYS.
In some foreign countries, particularly Canada and the countries of Europe, Latin America and Asia Pacific, the pricing of prescription pharmaceuticals is subject to strict governmental control. In these countries, pricing negotiations with governmental authorities can take 12 to 24 months or longer after the receipt of regulatory approval and product launch.
In some foreign countries, particularly Canada and the countries of Europe, Latin America and Asia Pacific, the pricing and reimbursement of prescription pharmaceuticals is subject to strict governmental control. In these countries, pricing and reimbursement negotiations with governmental authorities can take 12 to 24 months or longer after the receipt of regulatory approval and product launch.
Even though EXONDYS 51, VYONDYS 53 and AMONDYS 45 have received accelerated approval from the FDA, they face future post-approval development and regulatory requirements, which present additional challenges for us to successfully navigate.
Even though EXONDYS 51, VYONDYS 53, AMONDYS 45 and ELEVIDYS have received accelerated approval from the FDA, they face future post-approval development and regulatory requirements, which present additional challenges for us to successfully navigate.
We experience significant fluctuations in sales of our products from period to period and, ultimately, we may never generate sufficient revenues from our products to reach or maintain profitability or sustain our anticipated levels of operations.
We experience significant fluctuations in sales of our products from period to period and, ultimately, we may never generate sufficient revenues from our products to maintain profitability or sustain our anticipated levels of operations.
Item 1A. R isk Factors. Set forth below and elsewhere in this report and in other documents we file with the SEC are descriptions of risks and uncertainties that could cause actual results to differ materially from the results contemplated by the forward-looking statements contained in this report.
Item 1A. R i sk Factors. Set forth below and elsewhere in this report and in other documents we file with the SEC are descriptions of risks and uncertainties that could cause actual results to differ materially from the results contemplated by the forward-looking statements contained in this report.
We may not be able to meet expectations with respect to sales of our products or attain profitability and positive cash-flow from operations.
We may not be able to meet expectations with respect to sales of our products or maintain profitability and positive cash-flow from operations.
Furthermore, we cannot predict to what extent the COVID-19 pandemic, depending on its duration, an economic recession, changes in fiscal policy or general increase in unemployment rates may disrupt global healthcare systems and access to our products or result in a widespread loss of individual health insurance coverage due to unemployment or trends in employee attrition, a shift from commercial payor coverage to government payor coverage, or an increase in demand for patient assistance and/or free drug programs, any of which would adversely affect access to our products and our net sales.
Furthermore, we cannot predict to what extent an economic recession, changes in fiscal policy or general increase in unemployment rates may disrupt global healthcare systems and access to our products or result in a widespread loss of individual health insurance coverage due to unemployment or trends in employee attrition, a shift from commercial payor coverage to government payor coverage, or an increase in demand for patient assistance and/or free drug programs, any of which would adversely affect access to our products and our net sales.
Delays in the process prior to first infusion could negatively impact the sales of our products; and • the exercise by Roche of its option to obtain an exclusive license to commercialize one or more of our Duchenne products beyond SRP-9001 outside of the U.S. and Roche’s subsequent commercialization efforts.
Delays in the process prior to first infusion could negatively impact the sales of our products, including any future gene therapy products; and • the exercise by Roche of its option to obtain an exclusive license to commercialize one or more of our Duchenne products beyond ELEVIDYS outside of the U.S. and Roche’s subsequent commercialization efforts.
The FDA granted accelerated approval for EXONDYS 51, VYONDYS 53 and AMONDYS 45, respectively, as therapeutic treatments for Duchenne in patients who have a confirmed mutation in the dystrophin gene that is amenable to exon 51, exon 53 and exon 45 skipping, respectively.
The FDA granted accelerated approval for EXONDYS 51, VYONDYS 53, AMONDYS 45 and ELEVIDYS, respectively, as therapeutic treatments for Duchenne in patients who have a confirmed mutation in the dystrophin gene that is amenable to exon 51, exon 53, exon 45 skipping, and ambulatory pediatric patients aged four through five years with Duchenne with a confirmed mutation in the Duchenne gene, respectively.
These healthcare reform efforts or any future legislation or regulatory actions aimed at controlling and reducing healthcare costs, including through measures designed to limit reimbursement, restrict access or impose unfavorable pricing modifications on pharmaceutical products, could impact our and our partners’ ability to obtain or maintain reimbursement for our products at satisfactory levels, or at all, which could materially harm our business and financial results.
These healthcare reform efforts or any future legislation or regulatory actions aimed at controlling and reducing healthcare costs, including through measures designed to limit reimbursement, restrict access or impose unfavorable pricing modifications on pharmaceutical products, could impact our and our partners’ ability to obtain or maintain reimbursement for our products at satisfactory levels, or at all, which could materially harm our business and financial results. - 34 - Additionally, ELEVIDYS and our gene therapy product candidates represent novel approaches to treatment that will call for new levels of innovation in both pricing, reimbursement, payment and drug access strategies.
These post-approval requirements and commitments may not be feasible and/or could impose significant burdens and costs on us; could negatively impact our development, manufacturing and supply of our products; and could negatively impact our financial results.
Under the accelerated approval pathway, continued approval may be contingent upon verification of a clinical benefit in confirmatory trials. These post-approval requirements and commitments may not be feasible and/or could impose significant burdens and costs on us; could negatively impact our development, manufacturing and supply of our products; and could negatively impact our financial results.
EXONDYS 51 is currently commercially available in the U.S. and Israel only, and VYONDYS 53 and AMONDYS 45 are currently commercially available in the U.S. only, although they are available in additional countries through our EAP.
EXONDYS 51 has been approved for marketing in the U.S., Israel and Kuwait, AMONDYS 45 in the U.S. and Kuwait, and VYONDYS 53 and ELEVIDYS have been approved for marketing only in the U.S. Our commercial PMO products are also available in additional countries through our EAP.
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In addition, the response to COVID-19 by healthcare providers has made it difficult for some patients to receive infusions or initiate treatment with our commercial products. The need to prioritize rated orders issued by the Federal Emergency Management Agency pursuant to the U.S.
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Defense Production Act could also impact the manufacturing, supply chain and distribution of our products and product candidates. For this and other reasons, such as delays in processing reauthorizations and modifications to program benefits by insurers, we expect that COVID-19 will reduce our revenue from commercial product sales.
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In addition, the impact of the ongoing COVID-19 pandemic has resulted in delays in processing reauthorizations and modifications to program benefits by insurers, making it difficult for patients to obtain or maintain favorable coverage decisions for our products.
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Additionally, our gene therapy product candidates represent novel approaches to treatment that will call for new levels of innovation in both pricing, reimbursement, payment and drug access strategies.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeLocation of Property Square Footage Lease Expiration Date Purpose Other Information 215 First Street, Cambridge, MA 149,589 September 2025 Laboratory and office space Corporate headquarters 100 Federal Street, Andover, MA 65,589 N/A- facility is owned Laboratory and office space Primarily laboratory space 300 Federal Street, Andover, MA 23,102 December 2024 Office space Office space 55 Network Drive, Burlington, MA 44,740 December 2024 Laboratory and office space Primarily laboratory space 5200 Blazer Parkway, Dublin, OH 3rd Floor 22,600 December 2023 Laboratory and office space Primarily laboratory space 3435 Stelzer Road, Columbus, OH 131,926 December 2036 Laboratory and office space Primarily laboratory space 701 West Main Street, Suite 102, Durham, NC 4,346 March 2024 Laboratory and office space Primarily laboratory space
Biggest changeLocation of Property Square Footage Lease Expiration Date Purpose Other Information 215 First Street, Cambridge, MA 149,589 September 2025 Laboratory and office space Corporate headquarters 600 Federal Street, Andover, MA 11,832 December 2026 Laboratory and office space Laboratory and office space 100 Federal Street, Andover, MA 65,589 N/A- facility is owned Laboratory and office space Primarily laboratory space 300 Federal Street, Andover, MA 23,102 December 2024 Office space Office space 55 Network Drive, Burlington, MA 44,740 December 2024 Laboratory and office space Primarily laboratory space 50-52 Crosby Drive, Bedford, MA 288,000 January 2038 Laboratory and office space Primarily laboratory space 5200 Blazer Parkway, Dublin, OH 3rd Floor 22,600 October 2024 Laboratory and office space Primarily laboratory space 3435 Stelzer Road, Columbus, OH 151,661 December 2036 Laboratory and office space Primarily laboratory space 701 West Main Street, Suite 102, Durham, NC 4,346 March 2025 Laboratory and office space Primarily laboratory space
Item 2. Properties. A description of the facilities we own and/or occupy is included in the following table. We believe that our current facilities in Cambridge, Andover and Burlington, Massachusetts, Dublin and Columbus, Ohio and Durham, North Carolina are suitable and will provide sufficient capacity to meet the projected needs of our business for the next 12 months.
Item 2. Properties. A description of the facilities we own and/or occupy is included in the following table. We believe that our current facilities in Cambridge, Andover, Burlington and Bedford, Massachusetts, Dublin and Columbus, Ohio and Durham, North Carolina are suitable and will provide sufficient capacity to meet the projected needs of our business for the next 12 months.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 3. Lega l Proceedings. For material legal proceedings, please read Note 21, Commitments and Contingencies - Litigation to our consolidated financial statements included in this Annual Report. Item 4. Mine Sa fety Disclosures. Not applicable. - 69 - PART II
Biggest changeItem 3. Lega l Proceedings. For material legal proceedings, please read Note 21, Commitments and Contingencies - Litigation to our consolidated financial statements included in this Annual Report. Item 4. Mine Sa fety Disclosures. Not applicable. - 71 - PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeDividends We did not declare or pay cash dividends on our common stock in 2022, 2021 or 2020. We currently expect to retain future earnings, if any, to finance the operation and expansion of our business, and we do not anticipate paying any cash dividends in the foreseeable future.
Biggest changeDividends We did not declare or pay cash dividends on our common stock in 2023, 2022 or 2021. We currently expect to retain future earnings, if any, to finance the operation and expansion of our business, and we do not anticipate paying any cash dividends in the foreseeable future.
Item 5. Market for Registrant’s Common Equity, Related St ockholder Matters and Issuer Purchases of Equity Securities. Market Information Our common stock is quoted on the Nasdaq Global Select Market under the same symbol “SRPT”. Holders As of February 23, 2023, we had 161 stockholders of record of our common stock.
Item 5. Market for Registrant’s Common Equity, Related St ockholder Matters and Issuer Purchases of Equity Securities. Market Information Our common stock is quoted on the Nasdaq Global Select Market under the same symbol “SRPT”. Holders As of February 23, 2024, we had 157 stockholders of record of our common stock.
This graph assumes an investment of $100 after the market closed December 29, 2017 in each of our common stock, the NASDAQ Composite Index, NASDAQ Biotechnology Index and the NYSE ARCA Biotechnology Index, and assumes reinvestment of dividends, if any. The stock price performance shown on the graph below is not necessarily indicative of future stock price performance.
This graph assumes an investment of $100 after the market closed December 31, 2018 in each of our common stock, the NASDAQ Composite Index, NASDAQ Biotechnology Index and the NYSE ARCA Biotechnology Index, and assumes reinvestment of dividends, if any. The stock price performance shown on the graph below is not necessarily indicative of future stock price performance.
Recent Sales of Unregistered Securities. None. Purchases of Equity Securities by the Issuer and Affiliated Purchasers. None. Item 6. Reserved - 70 -
Recent Sales of Unregistered Securities. None. Purchases of Equity Securities by the Issuer and Affiliated Purchasers. None. Item 6. Reserved - 72 -

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThis was offset primarily by $26.1 million of up-front payments as a result of the execution of certain research and license agreements, $4.5 million of expense incurred as a result of milestone achievements in certain research and license agreements and $4.5 million of option and termination expenses during 2022; - 76 - • $5.4 million increase in professional service expenses primarily due to an increase in reliance on third-party research and development contractors; • $12.7 million decrease in pre-clinical expenses primarily due to a decrease in toxicology study activity in our PPMO platforms; • $8.2 million decrease in collaboration cost-sharing expenses primarily due to the termination of the Lysogene S.A. license and collaboration agreement and timing of expense incurred related to Genethon's micro-dystrophin drug candidate; • $3.2 million increase in research and other expenses primarily driven by increases in lab-related expenses, partially offset by a decrease in sponsored research with academic institutions during 2022; and • $27.0 million increase in the offset to expense associated with a collaboration reimbursement from Roche primarily due to continuing development of our SRP-9001 gene therapy programs.
Biggest changeThe increase was primarily driven by the following: • $143.7 million decrease in manufacturing expenses primarily due to the capitalization of commercial batches of ELEVIDYS manufactured after its approval in June 2023 and a decrease of $54.0 million related to the minimum purchase requirements under a gene therapy manufacturing and supply agreement with Thermo (the “Thermo Agreement”) in 2022, with no similar activity in 2023; • $51.5 million increase in clinical trial expenses primarily due to an increased patient enrollment and site activation for our MIS51ON, MOMENTUM, ENVISION, EMERGENE and EXPEDITION programs, as well as additional PPMO clinical trials; • $38.8 million increase in compensation and other personnel expenses primarily due to changes in headcount; • $18.3 million increase in facility- and technology-related expenses primarily due to our continuing expansion efforts; - 78 - • $21.2 million increase in stock-based compensation expense primarily due to changes in headcount and the value of stock awards, as well as the achievement of performance conditions related to certain shares with performance conditions (“PSUs”) in 2023 with continuing vesting requirements related to a service condition; • $9.7 million increase in professional service expenses primarily related to the launch of ELEVIDYS prior to its regulatory approval in June 2023; • $21.9 million decrease in up-front, milestone and other expenses, primarily due to timing and costs related to the execution of certain research and license agreements and achievement of certain milestones year over year; • $3.1 million increase in pre-clinical expenses primarily due to an increase in toxicology study activity across multiple gene therapy and PPMO platforms; • $12.0 million increase in research and other expenses primarily driven by an increase in sponsored research with academic institutions during 2023 and an increase in collaboration cost-sharing expenses related to Genethon's micro-dystrophin drug candidate; and • $11.3 million decrease in the offset to expense associated with a collaboration reimbursement from Roche primarily due to a decrease in reimbursed cost related to the minimum purchase requirements under the Thermo Agreement for 2022, with no similar activity in 2023, partially offset by the continuing development of our SRP-9001 gene therapy programs.
Direct research and development expenses associated with our programs include clinical trial site costs, clinical manufacturing costs, costs incurred for consultants, up-front fees and milestones paid to third parties in connection with technologies that have not reached technological feasibility and do not have an alternative future use, and other external services, such as data management and statistical analysis support, and materials and supplies used in support of clinical programs.
Direct research and development expenses associated with our programs include clinical trial site costs, clinical manufacturing costs, costs incurred for consultants, up-front fees and milestones paid to third parties in connection with technologies that have not reached technological feasibility and do not have an alternative future use, and other external services, such as data management and statistical analysis - 77 - support, and materials and supplies used in support of clinical programs.
The net cash outflow from changes in our operating assets and liabilities was primarily driven by the following: • $89.2 million decrease in deferred revenue related to the collaboration with Roche; • $61.6 million increase in accounts receivable due to an increase in demand for our products; and • $50.8 million increase in inventory due to our continuing build-up of inventory purchased in 2022 as the demand for our products increased.
The net cash outflow from changes in our operating assets and liabilities was primarily driven by the following: • $89.2 million decrease in deferred revenue related to the collaboration with Roche; • $61.6 million increase in accounts receivable, net due to an increase in demand for our PMO products; and • $50.8 million increase in inventory due to our continuing build-up of inventory purchased in 2022 as the demand for our PMO products increased.
Expense incurred related to excess inventory, obsolete inventory, or inventories that do not meet our quality specifications are recorded as a component of cost of sales in the consolidated statements of operations. Income Tax We recognize the effect of income tax positions only if those positions are more likely than not of being sustained upon an examination.
Expense incurred related to excess inventory, obsolete inventory, or inventories that do not meet our quality specifications is recorded as a component of cost of sales in the consolidated statements of operations. Income Tax We recognize the effect of income tax positions only if those positions are more likely than not of being sustained upon an examination.
We cannot provide assurances that financing will be available when and as needed or that, if available, the financings will be on favorable or acceptable terms. If we are unable to obtain additional financing when and if we require, this would have a material adverse effect on our business and results of operations.
We cannot provide assurances that financing will be available when and as needed or that, if available, the financings will be on favorable or acceptable terms. If we are unable to obtain additional financing when and if we require, this would have a material - 81 - adverse effect on our business and results of operations.
In May 2021, we announced results from the 30 mg/kg cohort of Part A of Study 5051-201. We initiated Part B of Study 5051-201 in the fourth quarter of 2021. In July 2022, the FDA placed Study 5051-201 on clinical hold following a serious adverse event of hypomagnesemia. The clinical hold was lifted in August 2022.
In May 2021, we announced results from the 30 mg/kg cohort of Part A of Study 5051-201. We initiated Part B of Study 5051-201 in the fourth quarter of 2021. In July 2022, - 73 - the FDA placed Study 5051-201 on clinical hold following a serious adverse event of hypomagnesemia. The clinical hold was lifted in August 2022.
Indirect costs of our clinical programs include salaries, stock-based compensation and allocation of our facility- and technology-related costs. Research and development expenses represent a substantial percentage of our total operating expenses. We do not maintain or evaluate and, therefore, do not allocate internal research and development costs on a project-by-project basis.
Indirect costs of our programs include salaries, stock-based compensation and allocation of our facility- and technology-related costs. Research and development expenses represent a substantial percentage of our total operating expenses. We do not maintain or evaluate and, therefore, do not allocate internal research and development costs on a project-by-project basis.
EXONDYS 51, VYONDYS 53 and AMONDYS 45 inventory that may be used in clinical development programs is charged to research and development expense when the product enters the research and development process and no longer can be used for commercial purposes.
EXONDYS 51, VYONDYS 53, AMONDYS 45, and ELEVIDYS inventory that may be used in clinical development programs is charged to research and development expense when the product enters the research and development process and no longer can be used for commercial purposes.
The Company accounted for the repurchase of the 2024 Notes as a debt extinguishment by recognizing the difference between the repurchase price of the debt and the net carrying amount of the extinguished debt as loss on debt extinguishment. The loss incurred on the extinguishment was $98.5 million.
The Company accounted for the repurchase of the 2024 Notes as a debt extinguishment by recognizing the difference between the repurchase price of the debt and the net carrying amount of the extinguished debt as loss on debt extinguishment. The loss incurred on the extinguishment for 2022 was $98.5 million.
Discussions of 2020 items and year-to-year comparisons between 2021 and 2020 have been excluded from this Form 10-K and can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021.
Discussions of 2021 items and year-to-year comparisons between 2022 and 2021 have been excluded from this Form 10-K and can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022.
Research and development expenses Research and development expenses consist of costs associated with research activities as well as costs associated with our product development efforts, conducting pre-clinical trials, clinical trials and manufacturing activities.
Research and development expenses Research and development expenses consist of costs associated with research activities as well as those associated with our product development efforts, conducting pre-clinical trials, clinical trials and manufacturing activities.
Throughout this discussion, unless the context specifies or implies otherwise, the terms “Sarepta”, “we”, “us” and “our” refer to Sarepta Therapeutics, Inc. and its subsidiaries. This section discusses 2022 and 2021 items and year-to-year comparisons between 2022 and 2021.
Throughout this discussion, unless the context specifies or implies otherwise, the terms “Sarepta”, “we”, “us” and “our” refer to Sarepta Therapeutics, Inc. and its subsidiaries. This section discusses 2023 and 2022 items and year-to-year comparisons between 2023 and 2022.
A summary description of our key product candidates, including those in collaboration with our strategic partners, is as follows: • SRP-5051 uses our next-generation chemistry platform, cell-penetrating peptide-conjugated PPMO, and our exon-skipping technology to skip exon 51 of the dystrophin gene.
A summary description of our key product candidates, including those in collaboration with our strategic partners, is as follows: • SRP-5051 uses our next-generation chemistry platform, cell-penetrating peptide-conjugated PMO (“PPMO”), and our exon-skipping technology to skip exon 51 of the dystrophin gene.
The loss incurred on the extinguishment was $26.9 million and represents the difference between the aggregate payoff amount and the net carrying amount of the December 2019 Term Loan.
The loss incurred on the extinguishment for 2022 was $26.9 million and represents the difference between the aggregate payoff amount and the net carrying amount of the December 2019 Term Loan.
Prior to receiving regulatory approval for EXONDYS 51, VYONDYS 53 and AMONDYS 45 by the FDA in September 2016, December 2019 and February 2021, respectively, we expensed such manufacturing and material costs as research and development expenses.
Prior to receiving regulatory approval for EXONDYS 51, VYONDYS 53, AMONDYS 45 and ELEVIDYS by the FDA in September 2016, December 2019, February 2021 and June 2023, respectively, we expensed such manufacturing and material costs as research and development expenses.
We believe the following accounting policies to be most critical to the judgments and estimates used in the preparation of our consolidated financial statements: • inventory; • income tax; and • stock-based compensation. Inventory Valuation Inventories are stated at the lower of cost and net realizable value with cost determined on a first-in, first-out basis.
We believe the following accounting policies to be most critical to the judgments and estimates used in the preparation of our consolidated financial statements: • inventory; and - 74 - • income tax. Inventory Valuation Inventories are stated at the lower of cost and net realizable value with cost determined on a first-in, first-out basis.
Risk Factors of this Annual Report on Form 10-K. - 72 - Critical Accounting Policies and Estimates The discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
Critical Accounting Policies and Estimates The discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
On September 16, 2022, the Company repaid in full all of its amounts outstanding with respect to the December 13, 2019, term loan with Biopharma Credit PLC and Biopharma Credit Investments V (Master) LP (the "December 2019 Term Loan") and repaid in full all obligations to the lenders (see Note 13, Indebtedness ).
On September 16, 2022, the Company repaid in full all of its amounts outstanding with respect to the December 13, 2019, term loan with Biopharma Credit PLC and Biopharma Credit Investments V (Master) LP (the “December 2019 Term Loan”) and repaid in full all obligations to the lenders.
Cost of sales (excluding amortization of in-licensed rights) Our cost of sales (excluding amortization of in-licensed rights) consists of royalty payments primarily to BioMarin and UWA and inventory costs that relate to sales of our products and the related overhead costs.
Cost of sales (excluding amortization of in-licensed rights) Our cost of sales (excluding amortization of in-licensed rights) consists of inventory costs that relate to sales of our products and the related overhead costs and royalty payments primarily to BioMarin and UWA for the PMO Products and to Nationwide for ELEVIDYS.
Our future expenditures and long-term capital requirements may be substantial and will depend on many factors, including but not limited to the following: • our ability to continue to generate revenues from sales of EXONDYS 51, VYONDYS 53, AMONDYS 45 and potential future products; • the timing and costs associated with our expansion efforts; • the timing and costs of building out our manufacturing capabilities; - 79 - • the timing of advanced payments related to our future inventory commitments and manufacturing obligations; • the timing and costs associated with our existing lease obligations and new obligations expected to be entered into during the following year; • the timing and costs associated with our clinical trials and pre-clinical trials; • the attainment of milestones and our obligations to make milestone payments to Myonexus's selling shareholders, BioMarin, Nationwide, UWA and other institutions; • obligations to holders of our convertible notes; and • the costs of filing, prosecuting, defending and enforcing patent claims and our other intellectual property rights.
Our future expenditures and long-term capital requirements may be substantial and will depend on many factors, including but not limited to the following: • our ability to continue to generate revenues from sales of commercial products and potential future products; • the timing and costs associated with our expansion efforts; • the timing and costs of building out our manufacturing capabilities; • the timing of payments related to our future inventory commitments and manufacturing obligations; • the timing and costs associated with our existing lease obligations and new obligations expected to be entered into in future years; • the timing and costs associated with our clinical trials and pre-clinical trials; • the attainment of milestones and our obligations to make milestone payments to Myonexus's selling shareholders, BioMarin, Nationwide, UWA and other institutions; • obligations to holders of our convertible notes; and • the costs of filing, prosecuting, defending and enforcing patent claims and our other intellectual property rights.
We are developing gene therapy programs for various forms of LGMDs. The most advanced of our LGMD product candidates, SRP-9003, is designed to transfer a gene that codes for and restores beta-sarcoglycan protein with the goal of restoring the dystrophin associated protein complex. It utilizes the AAVrh.74 vector system, the same vector used in our SRP-9001 gene therapy program.
The most advanced of our LGMD product candidates, SRP-9003, is designed to transfer a gene that codes for and restores beta-sarcoglycan protein with the goal of restoring the dystrophin associated protein complex. It utilizes the AAVrh.74 vector system, the same vector used in our SRP-9001 gene therapy program.
The likelihood of our long-term success must be considered in light of the expenses, difficulties and delays frequently encountered in the development and commercialization of new pharmaceutical products, competitive factors in the marketplace and the complex regulatory environment in which we operate. We may never achieve significant revenue or profitable operations.
The likelihood of our long-term success must be considered in light of the expenses, difficulties and delays frequently encountered in the development and commercialization of new pharmaceutical products, competitive factors in the marketplace, the risks associated with government sponsored reimbursement programs and the complex regulatory environment in which we operate. We may never achieve significant revenue or profitable operations.
We commercialized three products, all of which were granted accelerated approval by the FDA: • EXONDYS 51 (eteplirsen) Injection (“EXONDYS 51”) is indicated for the treatment of Duchenne in patients who have a confirmed mutation of the dystrophin gene that is amenable to exon 51 skipping.
We commercialized four products, all of which were granted accelerated approval by the FDA: • EXONDYS 51 (eteplirsen) Injection (“EXONDYS 51”), approved by the FDA on September 19, 2016, is indicated for the treatment of Duchenne in patients who have a confirmed mutation of the dystrophin gene that is amenable to exon 51 skipping.
VYONDYS 53 uses our PMO chemistry and exon-skipping technology to skip exon 53 of the dystrophin gene. • AMONDYS 45 (casimersen) Injection (“AMONDYS 45”) is indicated for the treatment of Duchenne in patients who have a confirmed mutation of the dystrophin gene that is amenable to exon 45 skipping.
VYONDYS 53 uses our PMO chemistry and exon-skipping technology to skip exon 53 of the dystrophin gene. • AMONDYS 45 (casimersen) Injection (“AMONDYS 45”), approved by the FDA on February 25, 2021, is indicated for the treatment of Duchenne in patients who have a confirmed mutation of the dystrophin gene that is amenable to exon 45 skipping.
Beyond 2023, our cash requirements will depend extensively on our ability to advance our research, development and commercialization of programs. We expect to seek additional financings primarily from, but not limited to, the sale and issuance of equity and debt securities, the licensing or sale of our technologies, additional government contracts and/or funded research and development agreements.
Beyond 2024, our cash requirements will depend extensively on our ability to advance our research, development and commercialization of product candidates. We may seek additional financings primarily from, but not limited to, the sale and issuance of equity and debt securities, the licensing or sale of our technologies, and entering into additional government contracts and/or funded research and development agreements.
Cash used in operating activities in 2022 was primarily driven by the net loss of $703.5 million, adjusted for following: • $233.0 million in stock-based compensation expense; • $125.4 million in loss on debt extinguishment of the 2024 Notes and 2019 Term Loan; • $41.9 million in depreciation and amortization expense; and • $33.6 million in other non-cash items. - 80 - These amounts were partially offset by the gain on contingent consideration of $6.7 million and $9.6 million in other non-cash items.
Cash used in operating activities in 2022 was primarily driven by the net loss of $703.5 million, adjusted for following: • $233.0 million in stock-based compensation expense; • $125.4 million in loss on debt extinguishment of the 2024 Notes and 2019 Term Loan; • $41.9 million in depreciation and amortization expense; and • $27.9 million in other non-cash items.
For products and product candidates that are currently in various research and development stages, we may be obligated to make up to $3.2 billion of future development, regulatory, up-front royalty and sales milestone payments associated with our collaboration and license agreements. Payments under these agreements generally become due and payable upon achievement of certain development, regulatory or commercial milestones.
For products and product candidates that are currently approved or are in various research and development stages, we may be obligated to make up to $3.2 billion of future development, regulatory, up-front royalty and sales milestone payments associated with our collaboration and license agreements.
EXONDYS 51 uses our PMO chemistry and exon-skipping technology to skip exon 51 of the dystrophin gene. • VYONDYS 53 (golodirsen) Injection (“VYONDYS 53”) is indicated for the treatment of Duchenne in patients who have a confirmed mutation of the dystrophin gene that is amenable to exon 53 skipping.
EXONDYS 51 uses our phosphorodiamidate morpholino oligomer (“PMO”) chemistry and exon-skipping technology to skip exon 51 of the dystrophin gene. • VYONDYS 53 (golodirsen) Injection (“VYONDYS 53”), approved by the FDA on December 12, 2019, is indicated for the treatment of Duchenne in patients who have a confirmed mutation of the dystrophin gene that is amenable to exon 53 skipping.
Applying our proprietary, highly-differentiated and innovative technologies, and through collaborations with our strategic partners, we have developed multiple approved products for the treatment of Duchenne and are developing potential therapeutic candidates for a broad range of diseases and disorders, including Duchenne, LGMDs, and other CNS related disorders.
Applying our proprietary, highly differentiated and innovative technologies, and through collaborations with our strategic partners, we have developed multiple approved products for the treatment of Duchenne muscular dystrophy (“Duchenne”) and are developing potential therapeutic candidates for a broad range of diseases and disorders, including Duchenne, Limb-girdle muscular dystrophies (“LGMDs”), and other neuromuscular and central nervous system (“CNS”) related disorders.
Cash provided by financing activities in 2022 consisted primarily of the following: • $1,127.4 million in proceeds from the 2027 Notes offering, net of commissions; • $30.0 million in proceeds from exercise of options and purchase of stock under our Employee Stock Purchase Program; and • $26.3 million in partial settlement of capped call share options for the 2024 Notes.
Cash provided by financing activities in 2022 primarily consisted of the following: • $1,127.4 million in proceeds from the 2027 Notes offering, net of commissions; • $30.0 million in proceeds from exercise of options and purchase of stock under our Employee Stock Purchase Program; and • $26.3 million in partial settlement of capped call share options for the 2024 Notes. - 83 - These amounts were partially offset by the following items: • $550.0 million for the repayment of the 2019 Term Loan; • $247.9 million in the repurchase of a portion of the 2024 Notes; • $127.3 million purchase of capped call share options for the 2027 Notes; and • $25.4 million for payment on the debt extinguishment of the 2019 Term Loan.
Our cash equivalents and investments consist of money market funds, corporate bonds, commercial paper, government and government agency debt securities and certificates of deposit. Other expense, net for 2022 decreased by approximately $33.4 million compared with 2021.
Interest expense primarily includes interest accrued on our convertible notes. Our cash equivalents and investments consist of money market funds, corporate bonds, commercial paper, government and government agency debt securities and certificates of deposit. Other income (expense), net for 2023 increased by approximately $61.4 million compared to 2022.
For AMONDYS 45 sold in 2022 and EXONDYS 51 and VYONDYS 53 sold in 2021, only part of the related manufacturing costs incurred had previously been expensed as research and development expenses.
For ELEVIDYS sold in 2023 and AMONDYS 45 sold in 2022, the majority of related manufacturing costs incurred had previously been expensed as research and development expense.
The holders exchanged $150.6 million in aggregate principal value of 2024 Notes held by them plus accrued interest of $0.8 million for an aggregate payment of $248.6 million.
On September 14, 2022, the Company entered into separate, privately negotiated transactions to repurchase a portion of the 2024 Notes. The holders exchanged $150.6 million in aggregate principal value of 2024 Notes held by them plus accrued interest of $0.8 million for an aggregate payment of $248.6 million.
If product related costs had not previously been expensed as research and development expenses prior to FDA approval, the incremental inventory costs related to our products sold in 2022 and 2021 would have been approximately $12.3 million and $22.0 million, respectively.
If product related costs had not previously been expensed as research and development expenses prior to receiving FDA approval, the incremental inventory costs related to our PMO Products sold would have been approximately $12.3 million higher for 2022 and those related to ELEVIDYS sold, including products sold to Roche under the Collaboration Agreement, would have been approximately $33.9 million higher for 2023.
As of December 31, 2022, we had approximately $480.8 million in cancellable future commitments based on existing CRO contracts. Recent Accounting Pronouncements Please read Note 2, Summary of Significant Accounting Policies and Recent Accounting Pronouncements to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
Recent Accounting Pronouncements Please read Note 2, Summary of Significant Accounting Policies and Recent Accounting Pronouncements to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
Each in-licensed right is being amortized on a straight-line basis over the remaining life of the patent from the first commercial sale of each product. For both the years ended December 31, 2022 and 2021, we recorded amortization of in-licensed rights of approximately $0.7 million.
Each in-licensed right is being amortized on a straight-line basis over the remaining life of the relevant patent from the date the related fee was incurred, either the regulatory approval or the first commercial sale of the applicable product. For 2023 and 2022, we recorded amortization of in-licensed rights of $1.6 million and $0.7 million, respectively.
Interest payments are included within the future debt obligations stated in the previous sentence. Lease obligations only include real estate leases that had commenced prior to December 31, 2022. The leases embedded in certain supply agreements are included in manufacturing obligations.
(2) Lease obligations only include real estate leases that had commenced prior to December 31, 2023. (3) The leases embedded in a certain supply agreement are included in manufacturing obligations.
Because the achievement of these milestones is not probable and payment is not required as of December 31, 2022, such contingencies have not been recorded in our consolidated financial statements. Amounts related to contingent milestone payments are not yet considered contractual obligations as they are contingent on the successful achievement of certain development, regulatory approval and commercial milestones.
Amounts related to contingent milestone payments are not yet considered contractual obligations as they are contingent on the successful achievement of certain development, regulatory approval and commercial milestones.
Cash used in investing activities in 2022 primarily consisted of the following: • $1,936.9 million of purchases of available-for-sale securities; and • $30.8 million of purchases of property and equipment due to the continued build-out of our facilities. These amounts were partially offset by $923.2 million of maturity and sales of available-for-sale securities.
Cash used in investing activities in 2022 primarily consisted of purchases of available-for-sale securities and property and equipment of $1,936.9 million and $30.8 million, respectively, partially offset by proceeds of $923.2 million from the maturity of available-for-sale securities. Financing Activities Cash provided by financing activities was $125.0 million in 2023 compared to $232.5 million in 2022.
AMONDYS 45 uses our PMO chemistry and exon-skipping technology to skip exon 45 of the dystrophin gene. We are in the process of conducting various EXONDYS 51, VYONDYS 53 and AMONDYS 45 clinical trials, including studies that are required to comply with our post-marketing FDA requirements/commitments to verify and describe the clinical benefit of these products.
ELEVIDYS is contraindicated in patients with any deletion in exon 8 and/or exon 9 in the Duchenne gene. We are in the process of conducting various clinical trials for our approved products, including studies that are required to comply with our post-marketing FDA requirements/commitments to verify and describe the clinical benefit of these products.
Income tax expense (benefit) Income tax expense for 2022 was approximately $13.5 million and income tax benefit for 2021 was $0.2 million. Income tax expense (benefit) for all periods presented relates to state and foreign income taxes.
Income tax expense Income tax expense for 2023 and 2022 was approximately $15.9 million and $13.5 million, respectively. Income tax expense for 2023 relates to state, foreign and federal taxes, while income tax expense for 2022 relates to state and foreign income taxes.
Operating activities used $443.2 million of cash in 2021.
Operating activities used $325.3 million of cash in 2022.
The decreases are primarily due to a $16.1 million increase in interest income and $11.1 million increase in accretion of investment discount due to the investment mix of our investment portfolio, as well as a $10.3 million reduction of interest expense incurred as a result of the repayment of our December 2019 Term Loan, partially offset by an increase of $4.9 million in losses on disposal of assets.
The increase is primarily due to a $38.5 million increase in accretion of investment discount, net and a $19.8 million increase in interest income due to the investment mix of our investment portfolio and an increase in interest rates, as well as a $31.2 million reduction of interest expense incurred as a result of the repayment of our December 2019 Term Loan in 2022, partially offset by a $27.7 million increase in the impairment of strategic investments and a $7.9 million decrease in gain (loss) on contingent consideration, net.
Cash Flows The following table summarizes our cash flow activity for each of the periods indicated: For the Year Ended December 31, 2022 2021 Change Change (in thousands) $ % Cash (used in) provided by Operating activities $ (325,346 ) $ (443,172 ) $ 117,826 (27 )% Investing activities (1,046,883 ) 495,413 (1,542,296 ) NM* Financing activities 232,507 561,569 (329,062 ) (59 )% (Decrease) increase in cash and cash equivalents $ (1,139,722 ) $ 613,810 $ (1,753,532 ) NM* * NM: not meaningful Operating Activities Cash used in operating activities, which consists of our net loss adjusted for non-cash items and changes in net operating assets and liabilities, totaled $325.3 million in 2022.
Cash Flows The following table summarizes our cash flow activity for each of the periods indicated: For the Year Ended December 31, 2023 2022 Change Change (in thousands) $ % Cash (used in) provided by Operating activities $ (500,993 ) $ (325,346 ) $ (175,647 ) 54 % Investing activities (165,803 ) (1,046,883 ) 881,080 (84 )% Financing activities 125,004 232,507 (107,503 ) (46 )% Decrease in cash and cash equivalents $ (541,792 ) $ (1,139,722 ) $ 597,930 (52 )% Operating Activities Cash used in operating activities, which consists of our net loss adjusted for non-cash items and changes in net operating assets and liabilities, totaled $501.0 million in 2023.
The following table summarizes our selling, general and administrative expenses by category for each of the periods indicated: For the Year Ended December 31, 2022 2021 Change Change (in thousands) $ % Stock-based compensation $ 171,725 $ 63,417 $ 108,308 171 % Compensation and other personnel expenses 122,127 103,528 18,599 18 % Professional services 97,330 73,605 23,725 32 % Facility- and technology-related expenses 33,156 31,113 2,043 7 % Other 27,618 11,251 16,367 145 % Roche collaboration reimbursement (535 ) (254 ) (281 ) 111 % Total selling, general and administrative expenses $ 451,421 $ 282,660 $ 168,761 60 % Selling, general and administrative expenses for 2022 increased by $168.8 million, or 60%, compared with 2021.
The following table summarizes our selling, general and administrative expenses by category for each of the periods indicated: For the Year Ended December 31, 2023 2022 Change Change (in thousands) $ % Professional services $ 158,279 $ 97,330 $ 60,949 63 % Compensation and other personnel expenses 157,317 122,127 35,190 29 % Stock-based compensation 100,025 171,725 (71,700 ) (42 )% Facility- and technology-related expenses 44,090 33,156 10,934 33 % Other 23,031 27,618 (4,587 ) (17 )% Roche collaboration reimbursement (871 ) (535 ) (336 ) 63 % Total selling, general and administrative expenses $ 481,871 $ 451,421 $ 30,450 7 % Selling, general and administrative expenses for 2023 increased by $30.5 million, or 7%, compared with 2022.
These amounts were partially offset by $7.8 million of taxes paid related to net share settlement of equity awards. Other Funding Commitments We have several on-going clinical trials in various stages. Our most significant clinical trial expenditures are to CROs. The CRO contracts are generally cancellable at our option.
Other Funding Commitments We have several on-going clinical trials in various development stages. Our most significant clinical trial expenditures are to CROs. The CRO contracts are generally cancellable at our option. As of December 31, 2023, we had approximately $580.0 million in cancellable future commitments based on existing CRO contracts.
For the years ended December 31, 2022 and December 31, 2021, we recognized $89.2 million and $89.5 million of collaboration and other revenues, respectively. For more information, please read Note 3, License and Collaboration Agreements .
For more information, please read Note 3, License and Collaboration Agreements . Collaboration and other revenues primarily relate to our collaboration arrangement with Roche. For both 2023 and 2022, we recognized $89.2 million of collaboration revenue, related to the amortization of performance obligations. For more information, please read Note 3, License and Collaboration Agreements .
Gain from sale of Priority Review Voucher In February 2021, we entered into an agreement to sell the PRV we received from the FDA in connection with the approval of AMONDYS 45 (the "AMONDYS 45 PRV").
Gain from sale of Priority Review Voucher In June 2023, we entered into an agreement to sell the rare pediatric disease Priority Review Voucher (“ELEVIDYS PRV”) we received from the FDA in connection with the approval of ELEVIDYS for consideration of $102.0 million, with no commission costs.
Please read Note 2, Summary of Significant Accounting Policies to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K for a further discussion of our critical accounting policies and estimates. - 73 - The following table sets forth selected consolidated statements of operations data for each of the periods indicated: For the Year Ended December 31, 2022 2021 Change Change (in thousands, except per share amounts) $ % Revenues: Products, net $ 843,769 $ 612,401 $ 231,368 38 % Collaboration and other 89,244 89,486 (242 ) (— )% Total revenues 933,013 701,887 231,126 33 % Cost and expenses: Cost of sales (excluding amortization of in-licensed rights) 139,989 97,049 42,940 44 % Research and development 877,090 771,182 105,908 14 % Selling, general and administrative 451,421 282,660 168,761 60 % Settlement and license charges — 10,000 (10,000 ) (100 )% Amortization of in-licensed rights 714 706 8 1 % Total cost and expenses 1,469,214 1,161,597 307,617 26 % Operating loss (536,201 ) (459,710 ) (76,491 ) 17 % Other (loss) income, net: Loss on debt extinguishment (125,441 ) — (125,441 ) NM* Gain on contingent consideration, net 6,700 7,200 (500 ) (7 )% Gain from sale of Priority Review Voucher — 102,000 (102,000 ) (100 )% Other expense, net (35,021 ) (68,438 ) 33,417 (49 )% Total other (loss) income, net (153,762 ) 40,762 (194,524 ) NM* Loss before income tax expense (benefit) (689,963 ) (418,948 ) (271,015 ) 65 % Income tax expense (benefit) 13,525 (168 ) 13,693 NM* Net loss $ (703,488 ) $ (418,780 ) $ (284,708 ) 68 % Net loss per share — basic and diluted $ (8.03 ) $ (5.15 ) $ (2.88 ) 56 % * NM: not meaningful Revenues The following table summarizes the components of our net product revenues, by product, for the periods indicated: For the Year Ended December 31, 2022 2021 Change Change (in thousands) $ % EXONDYS 51 $ 511,749 $ 454,361 $ 57,388 13 % AMONDYS 45 214,582 68,529 146,053 213 % VYONDYS 53 117,438 89,511 27,927 31 % Products, net $ 843,769 $ 612,401 $ 231,368 38 % Net product revenues for our products for 2022 increased by $231.4 million compared with 2021.
Please read Note 2, Summary of Significant Accounting Policies to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K for a further discussion of our critical accounting policies and estimates. - 75 - The following table sets forth selected consolidated statements of operations data for each of the periods indicated: For the Year Ended December 31, 2023 2022 Change Change (in thousands, except per share amounts) $ % Revenues: Products, net $ 1,144,876 $ 843,769 $ 301,107 36 % Collaboration and other 98,460 89,244 9,216 10 % Total revenues 1,243,336 933,013 310,323 33 % Cost and expenses: Cost of sales (excluding amortization of in-licensed rights) 150,343 139,989 10,354 7 % Research and development 877,387 877,090 297 (— )% Selling, general and administrative 481,871 451,421 30,450 7 % Amortization of in-licensed rights 1,559 714 845 118 % Total cost and expenses 1,511,160 1,469,214 41,946 3 % Operating loss (267,824 ) (536,201 ) 268,377 (50 )% Other loss, net: Loss on debt extinguishment (387,329 ) (125,441 ) (261,888 ) 209 % Gain from sale of Priority Review Voucher 102,000 — 102,000 NM* Other income (expense), net 33,055 (28,321 ) 61,376 217 % Total other loss, net (252,274 ) (153,762 ) (98,512 ) (64 )% Loss before income tax expense (520,098 ) (689,963 ) 169,865 25 % Income tax expense 15,879 13,525 2,354 17 % Net loss $ (535,977 ) $ (703,488 ) $ 167,511 24 % Net loss per share — basic and diluted $ (5.80 ) $ (8.03 ) $ 2.23 28 % * NM: not meaningful Revenues The following table summarizes the components of our net product revenues by product for the periods indicated: For the Year Ended December 31, 2023 2022 Change Change (in thousands) $ % EXONDYS 51 $ 540,576 $ 511,749 $ 28,827 6 % AMONDYS 45 273,755 214,582 59,173 28 % ELEVIDYS 200,356 — 200,356 NM* VYONDYS 53 130,189 117,438 12,751 11 % Products, net $ 1,144,876 $ 843,769 $ 301,107 36 % * NM: not meaningful Net product revenues for our products for 2023 increased by $301.1 million compared with 2022.
Other expense, net Other expense, net primarily consists of interest expense on our debt facilities, interest income on our cash, cash equivalents and investments, amortization of investment premium or accretion of investment discount, and unrealized gain or loss from our investment in our strategic investments. Interest expense includes interest accrued on our convertible notes and term loan.
Other income (expense), net Other income (expense), net primarily consists of interest expense on our debt facilities, interest income on our cash, cash equivalents and investments, amortization of investment premium or accretion of investment discount, unrealized gains or losses or an impairment of our strategic investments and gains or losses on contingent consideration, net related to regulatory-related contingent payments meeting the definition of a derivative.
The change primarily reflects increasing demand for our products and an increase in write-offs of certain batches of our products not meeting our quality specifications for the year ended December 31, 2022, as compared to the same period of 2021.
The change primarily reflects increasing demand for our PMO products, partially offset by a decrease in write-offs of certain batches of our products not meeting our quality specifications in 2023, as compared to 2022, as well as a decrease in royalty payments due to changes in the BioMarin royalty terms.
Cash provided by investing activities in 2021 primarily consisted of the following: • $466.0 million of maturity and sales of available-for-sale securities; and • $102.0 million of net proceeds related to the sale of the AMONDYS 45 PRV.
Cash used in investing activities in 2023 primarily consisted of purchases of available-for-sale securities, property and equipment and intangible assets of $2,044.9 million, $76.1 million and $11.2 million, respectively, partially offset by $102.0 million of net proceeds related to the sale of the ELEVIDYS PRV and $1,868.5 million from the maturity and sales of available-for-sale securities.
Following the termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, in April 2021, we completed our sale of the AMONDYS 45 PRV and received proceeds of $102.0 million, with no commission costs, which was recorded as a gain from sale of the PRV as it did not have a carrying value at the time of the sale.
The transaction was not subject to the conditions set forth under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and closed in June 2023. The net proceeds were recorded as a gain from sale of the ELEVIDYS PRV for 2023 as it did not have a carrying value at the time of the sale.
Cash used in operating activities in 2021 was primarily driven by the net loss of $418.8 million, adjusted for: • $113.9 million in stock-based compensation expense; • $38.0 million in depreciation and amortization expense; and • $31.0 million in other non-cash items.
Cash used in operating activities in 2023 was primarily driven by the net loss of $536.0 million, adjusted for the following non-cash charges: • $387.3 million in loss on debt extinguishment of the 2024 Notes; • $182.5 million in stock-based compensation expense; • $44.4 million in depreciation and amortization expense; • $30.3 million in impairments associated with our strategic investments; and • $19.7 million in other non-cash items.
The following table summarizes the components of our cost of sales for the periods indicated: For the Year Ended December 31, 2022 2021 Change Change (in thousands) $ % Inventory costs related to products sold $ 95,765 $ 56,720 $ 39,045 69 % Royalty payments 44,224 40,329 3,895 10 % Total cost of sales $ 139,989 $ 97,049 $ 42,940 44 % The cost of sales (excluding amortization of in-licensed rights) for 2022 increased $42.9 million, or 44%, compared with 2021.
The following table summarizes the components of our cost of sales for the periods indicated: For the Year Ended December 31, 2023 2022 Change Change (in thousands) $ % Inventory costs related to products sold (excluding products sold to Roche**) $ 108,988 $ 95,765 $ 13,223 14 % Royalty payments 39,537 44,224 (4,687 ) (11 )% Inventory costs related to products sold to Roche** 1,818 — 1,818 NM* Total cost of sales (excluding amortization of in-licensed rights) $ 150,343 $ 139,989 $ 10,354 7 % * NM: not meaningful ** See above for further details regarding product supply sold to Roche via contract manufacturing under our Collaboration Agreement.
Our principal uses of cash are research and development expenses, selling, general and administrative expenses, investments, capital expenditures, business development transactions, repayment of our term loan and a portion of our convertible debt and other working capital requirements. The changes in our working capital primarily reflect use of cash in operating activities.
Our principal uses of cash are research and development expenses, manufacturing costs, selling, general and administrative expenses, investments, capital expenditures, business development transactions, settlement of long-term debt and other working capital requirements. Refer to Note 13, Indebtedness and Note 19, Leases for additional discussion of our outstanding indebtedness and material changes to our leasing obligations, respectively.
As a result, a significant portion of our research and development expenses are not tracked on a project-by-project basis, as the costs may benefit multiple projects. - 75 - The following table summarizes our research and development expenses by project for each of the periods indicated: For the Year Ended December 31, 2022 2021 Change Change (in thousands) $ % SRP-9001 $ 424,210 $ 320,214 $ 103,996 32 % Other gene therapies 81,783 102,036 (20,253 ) (20 )% PPMO platform 50,026 35,652 14,374 40 % Eteplirsen (exon 51) 46,100 36,464 9,636 26 % Up-front, milestone, and other expenses 35,102 40,267 (5,165 ) (13 )% Casimersen (exon 45) 31,850 34,443 (2,593 ) (8 )% Golodirsen (exon 53) 14,707 28,898 (14,191 ) (49 )% Collaboration cost-sharing 4,242 12,425 (8,183 ) (66 )% Other projects 12,321 17,302 (4,981 ) (29 )% Internal research and development expenses 294,021 233,704 60,317 26 % Roche collaboration reimbursement (117,272 ) (90,223 ) (27,049 ) 30 % Total research and development expenses $ 877,090 $ 771,182 $ 105,908 14 % The following table summarizes our research and development expenses by category for each of the periods indicated: For the Year Ended December 31, 2022 2021 Change Change (in thousands) $ % Manufacturing expenses $ 445,758 $ 384,700 $ 61,058 16 % Compensation and other personnel expenses 148,385 115,394 32,991 29 % Clinical trial expenses 135,838 104,732 31,106 30 % Facility- and technology-related expenses 85,093 70,597 14,496 21 % Stock-based compensation 61,293 50,526 10,767 21 % Up-front, milestone, and other expenses 35,102 40,267 (5,165 ) (13 )% Professional services 19,264 13,900 5,364 39 % Pre-clinical expenses 8,704 21,410 (12,706 ) (59 )% Collaboration cost-sharing 4,242 12,425 (8,183 ) (66 )% Research and other 50,683 47,454 3,229 7 % Roche collaboration reimbursement (117,272 ) (90,223 ) (27,049 ) 30 % Total research and development expenses $ 877,090 $ 771,182 $ 105,908 14 % Research and development expenses for 2022 increased by $105.9 million, or 14%, compared with 2021.
The following table summarizes our research and development expenses by project for each of the periods indicated: For the Year Ended December 31, 2023 2022 Change Change (in thousands) $ % SRP-9001 $ 282,207 $ 424,210 $ (142,003 ) (33 )% Eteplirsen (exon 51) 90,829 46,100 44,729 97 % PPMO platform 78,231 50,026 28,205 56 % LGMD platform 58,529 27,949 30,580 109 % Other gene therapies 29,411 53,834 (24,423 ) (45 )% Casimersen (exon 45) 21,264 31,850 (10,586 ) (33 )% Golodirsen (exon 53) 16,556 14,707 1,849 13 % Up-front, milestone, and other expenses 13,232 35,102 (21,870 ) (62 )% Gene editing 12,177 10,537 1,640 16 % Other projects 10,288 6,026 4,262 71 % Internal research and development expenses 370,677 294,021 76,656 26 % Roche collaboration reimbursement (106,014 ) (117,272 ) 11,258 (10 )% Total research and development expenses $ 877,387 $ 877,090 $ 297 (— )% The following table summarizes our research and development expenses by category for each of the periods indicated: For the Year Ended December 31, 2023 2022 Change Change (in thousands) $ % Manufacturing expenses $ 302,025 $ 445,758 $ (143,733 ) (32 )% Clinical trial expenses 187,289 135,838 51,451 38 % Compensation and other personnel expenses 187,224 148,385 38,839 26 % Facility- and technology-related expenses 103,434 85,093 18,341 22 % Stock-based compensation 82,489 61,293 21,196 35 % Professional services 28,962 19,264 9,698 50 % Up-front, milestone, and other expenses 13,232 35,102 (21,870 ) (62 )% Pre-clinical expenses 11,838 8,704 3,134 36 % Research and other 66,908 54,925 11,983 22 % Roche collaboration reimbursement (106,014 ) (117,272 ) 11,258 (10 )% Total research and development expenses $ 877,387 $ 877,090 $ 297 (— )% Research and development expenses for 2023 slightly increased by $0.3 million, compared with 2022.
In March 2022, we announced 36-month functional data from three clinical trial participants in the low-dose cohort and 24-month functional data from two clinical trial participants in the high-dose cohort. We expect to engage with the FDA to discuss our next steps for our potentially pivotal trial in 2023.
In March 2022, we announced 36-month functional data from three clinical trial participants in the low-dose cohort and 24-month functional data from two clinical trial participants in the high-dose cohort. In January 2024, we announced that we had begun screening in Study SRP-9003-301, a Phase 3, multi-national, open-label study of SRP-9003.
The following table summarizes our financial condition for each of the periods indicated: For the Year Ended December 31, 2022 2021 Change Change (in thousands) $ % Financial assets: Cash and cash equivalents $ 966,777 $ 2,115,869 $ (1,149,092 ) (54 )% Short-term investments 1,022,597 — 1,022,597 NM* Restricted cash and investments 19,024 9,904 9,120 92 % Total cash, cash equivalents and investments $ 2,008,398 $ 2,125,773 $ (117,375 ) (6 )% Borrowings: Convertible debt $ 1,544,292 $ 563,673 $ 980,619 174 % Term loan — 533,203 (533,203 ) (100 )% Total borrowings $ 1,544,292 $ 1,096,876 $ 447,416 41 % Working capital Current assets $ 2,557,861 $ 2,604,099 $ (46,238 ) (2 )% Current liabilities 619,604 452,733 166,871 37 % Total working capital $ 1,938,257 $ 2,151,366 $ (213,109 ) (10 )% * NM: not meaningful For the year ended December 31, 2022, our principal sources of liquidity were primarily derived from sales of our products, net proceeds from our 2027 Notes offering, and our collaboration arrangement with Roche.
Refer to Note 18, Income Taxes for discussion of the key drivers impacting our effective tax rate. - 80 - Liquidity and Capital Resources The following table summarizes our financial condition for each of the periods indicated: For the Year Ended December 31, 2023 2022 Change Change (in thousands) $ % Financial assets: Cash and cash equivalents $ 428,430 $ 966,777 $ (538,347 ) (56 )% Short-term investments 1,247,820 1,022,597 225,223 22 % Restricted cash 15,579 19,024 (3,445 ) (18 )% Total cash, cash equivalents and investments $ 1,691,829 $ 2,008,398 $ (316,569 ) (16 )% Borrowings: Convertible debt $ 1,237,998 $ 1,544,292 $ (306,294 ) (20 )% Total borrowings $ 1,237,998 $ 1,544,292 $ (306,294 ) (20 )% Working capital Current assets $ 2,579,331 $ 2,557,861 $ 21,470 1 % Current liabilities 653,659 619,604 34,055 5 % Total working capital $ 1,925,672 $ 1,938,257 $ (12,585 ) (1 )% For 2023 and 2022, our principal sources of liquidity were primarily derived from sales of our products, net proceeds from sale of the ELEVIDYS PRV, net proceeds from our offering of the 2027 Notes, proceeds from the partial settlement of capped call options associated with the 2024 Notes Exchange and our collaboration arrangement with Roche.
Cash provided by financing activities in 2021 primarily consisted of the following: • $548.5 million in proceeds from the issuance of common stock; and • $20.8 million in proceeds from exercise of options and purchase of stock under our Employee Stock Purchase Program.
Cash provided by financing activities in 2023 consisted of $80.6 million in partial settlement of capped call options for the 2024 Notes and $51.2 million in proceeds from exercise of options and purchase of stock under our employee stock purchase program, partially offset by $6.9 million in third-party debt conversion costs related to the 2024 Notes Exchange.
The net cash outflow from changes in our operating assets and liabilities was primarily driven by the following: • $89.2 million decrease in deferred revenue related to the collaboration with Roche; • $83.8 million increase in inventory due to our continuing build-up of inventory purchased in 2021 as the demand for our products increased; and • $51.7 million increase in accounts receivable due to the launch of AMONDYS 45 in 2021 and an increase in demand for our products.
These non-cash charges were partially offset by the gain of $102.0 million recorded from the sale of the ELEVIDYS PRV and $46.2 million in accretion of investment discount, net. - 82 - The net cash outflow from changes in our operating assets and liabilities was primarily driven by the following: • $185.7 million increase in accounts receivable, net due to the launch of ELEVIDYS and an increase in the demand of our PMO Products; • $147.7 million increase in inventory primarily due to the addition of capitalized inventory corresponding to the regulatory approval of ELEVIDYS in June 2023; • $86.8 million decrease in deferred revenue primarily related to the collaboration with Roche; • $50.1 million decrease in accounts payable, accrued expenses, lease liabilities and other liabilities, primarily due to the $54.0 million shortfall payment to Thermo and payments to Catalent for raw materials in 2023 and the overall timing and invoicing of payments; and • $10.7 million increase in other assets primarily due to the timing and consumption of manufacturing prepaids.
Investing Activities Cash used in investing activities was $1,046.9 million in 2022 compared to $495.4 million of cash provided by investing activities in 2021.
Investing Activities Cash used in investing activities for 2023 and 2022 were $165.8 million and $1,046.9 million, respectively.
Loss on debt extinguishment On September 14, 2022, the Company entered into separate, privately negotiated transactions to repurchase a portion of the outstanding senior convertible notes due on November 15, 2024 (the “2024 Notes”) (see Note 13, Indebtedness ).
Loss on debt extinguishment On November 14, 2017, we issued $570.0 million aggregate principal amount of senior convertible notes due on November 15, 2024. On March 2, 2023, we entered into separate, privately negotiated exchange agreements with certain holders of the outstanding 2024 Notes (the “Exchange Agreements”).
This was primarily driven by the following: • $108.3 million increase in stock-based compensation expense primarily due to the Chief Executive Officer grant modification executed during 2022; • $18.6 million increase in compensation and other personnel expenses primarily due to changes in headcount; • $23.7 million increase in professional service expenses primarily due to an increase in reliance on third-party selling, general and administrative contractors; • $2.0 million increase in facility- and technology-related expenses primarily due to our continuing expansion efforts; and • $16.4 million increase in other expenses primarily related to charitable contributions made during 2022.
This was primarily driven by the following: • $60.9 million increase in professional service expenses primarily related to the launch of ELEVIDYS and ongoing litigation matters; • $35.2 million increase in compensation and other personnel expenses primarily due to changes in headcount; • $71.7 million decrease in stock-based compensation expense primarily related to the execution of the Chief Executive Officer grant modification agreement in 2022, partially offset by the achievement of performance conditions related to certain PSUs in 2023 with continuing vesting requirements related to a service condition, as well as changes in headcount and the value of stock awards; • $10.9 million increase in facility- and technology-related expenses primarily due to our continuing expansion efforts; and • $4.6 million decrease in other expenses primarily related to timing of charitable contributions. - 79 - Amortization of in-licensed rights Amortization of in-licensed rights relates to the agreements we entered into with UWA, Nationwide, BioMarin and Parent Project Muscular Dystrophy in April 2013, December 2016, July 2017 and May 2018, respectively.
Removed
We are currently enrolling Part B of Study 5051-201. • SRP-9001 (Duchenne gene therapy program) aims to express a smaller but still functional version of dystrophin. A unique, engineered dystrophin is used because naturally-occurring dystrophin is too large to fit in an adeno-associated virus (“AAV”) vector.
Added
AMONDYS 45 uses our PMO chemistry and exon-skipping technology to skip exon 45 of the dystrophin gene. • ELEVIDYS (delandistrogene moxeparvovec-rokl), approved by the FDA on June 22, 2023, is an adeno-associated virus based gene therapy for the treatment of ambulatory pediatric patients aged 4 through 5 years with Duchenne with a confirmed mutation in the Duchenne gene.
Removed
In the fourth quarter of 2017, an investigational new drug (“IND”) application for SRP-9001 was cleared by the FDA, and a Phase 1/2a clinical trial in individuals with Duchenne was initiated (Study 101). In October 2018, Nationwide Children’s Hospital (“Nationwide”) presented results from the Phase 1/2a clinical trial in - 71 - four individuals with Duchenne enrolled in the trial.
Added
In January 2024, we announced results from Part B of Study 5051-2021. We plan to meet with FDA to discuss next steps in the second half of 2024. • SRP-9003 (LGMD, gene therapy program) . We are developing gene therapy programs for various forms of LGMDs.
Removed
In March 2019, we presented nine-month functional and creatine kinase (“CK”) data from baseline from these four individuals, and twelve-month CK data from baseline from one of these individuals. In June 2020, we announced that functional, safety and tolerability data at twelve-months from baseline from these four individuals had been published in JAMA Neurology.
Added
We are conducting various clinical trials for ELEVIDYS and announced our submission of an efficacy supplement to the biologics license application ("BLA") for ELEVIDYS to expand its label indication to remove age and ambulatory restrictions from the approved indication on December 22, 2023.
Removed
In September 2020, we presented functional, safety and tolerability data at 24 months from these four individuals. In the fourth quarter of 2018, we commenced a randomized, double-blind, placebo-controlled trial of SRP-9001 with the goal to establish the functional benefits of SRP-9001 protein expression (Study 102).
Added
We also submitted our postmarketing requirement related to the Phase 3 SRP-9001-301 confirmatory study for ELEVIDYS requesting conversion from accelerated approval to traditional approval during December 2023. The FDA granted priority review with a review goal date of June 21, 2024.
Removed
In January 2021, we released top-line results for Part 1 of Study 102 (the 48-week assessment of 41 participants) and interim expression results from Part 2 of Study 102 (the crossover phase). We announced topline results for Part 2 of Study 102 in January 2022.
Added
The increase primarily reflects increasing demand for EXONDYS 51, AMONDYS 45 and VYONDYS 53 (collectively, the “PMO Products”), as well as $200.4 million of net product revenues associated with sales of ELEVIDYS for 2023 after its approval in June 2023.
Removed
We have completed dosing in the first cohort in Study 103, an open-label study evaluating the safety and expression of commercially representative material for SRP-9001. In May 2021, we announced 12-week expression and safety results from the first 11 participants enrolled in Study 103.
Added
The following table summarizes the components of our collaboration and other revenues for the periods indicated: - 76 - For the Year Ended December 31, 2023 2022 Change Change (in thousands) $ % Amortization of performance obligations** $ 89,244 $ 89,244 $ — (— )% Contract manufacturing 9,216 — 9,216 NM* Total collaboration and other $ 98,460 $ 89,244 $ 9,216 10 % * NM: not meaningful ** Related to the recognition of previously deferred revenue under the Roche collaboration agreement as the Company satisfies its performance obligations under the contract.
Removed
In October 2021, we announced functional data from the first 11 patients and tolerability data for all 32 patients enrolled in Study 103. We also initiated our pivotal trial (Study 301) in October 2021 and expect a data read out in the fourth quarter of 2023. In July 2022, we announced additional data from our Studies 102 and 103.
Added
In addition, in accordance with our Collaboration Agreement with Roche, the parties agreed to enter into a supply agreement in order for Sarepta to supply Roche with clinical and commercial batches of ELEVIDYS (the “Supply Agreement”).
Removed
In September 2022, we announced that we submitted a biologics license application (“BLA”) seeking accelerated approval of SRP-9001 for the treatment of ambulant individuals with Duchenne. In November 2022, the FDA accepted for filing and granted priority review for the BLA for SRP-9001 with an anticipated regulatory action date of May 29, 2023. • SRP-9003 (LGMD, gene therapy program) .
Added
While the Supply Agreement is in the process of being negotiated, we delivered several batches of commercial ELEVIDYS supply to Roche that were agreed upon on a purchase order-by-purchase order basis. In 2023, we recognized $9.2 million of contract manufacturing collaboration revenue related to these shipments, with no similar activity for 2022.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

3 edited+0 added−0 removed2 unchanged
Biggest changeFor the year ended December 31, 2022, we estimate that such hypothetical adverse 10 basis point movement would result in a hypothetical loss in fair value of approximately $0.4 million to our interest rate sensitive instruments. The Company did not hold any investments in interest rate sensitive instruments as of December 31, 2021.
Biggest changeFor the year ended December 31, 2023, we estimate that such hypothetical adverse 10 basis point movement would result in a hypothetical loss in fair value of approximately $0.5 million to our interest rate sensitive instruments.
Our $1,150.0 million aggregate principal amount of our 2027 Notes has a fixed interest rate of 1.25% per annum, payable semi-annually in cash on each March 15 and September 15 and our $419.4 million aggregate principal amount of our 2024 Notes has a fixed interest rate of 1.5% per annum, payable semi-annually in cash on each May 15 and November 15, and therefore are not subject to fluctuations in market interest rates.
Our $1,150.0 million aggregate principal amount of our 2027 Notes has a fixed interest rate of 1.25% per annum, payable semi-annually in cash on each March 15 and September 15 and our $105.8 million aggregate principal amount of our 2024 Notes has a fixed interest rate of 1.5% per annum, payable semi-annually in cash on each May 15 and November 15, and therefore are not subject to fluctuations in market interest rates.
As of December 31, 2022, we had $2,008.4 million of cash, cash equivalents and investments, comprised of $1,022.6 million of short-term investments, $966.8 million of cash and cash equivalents and $19.0 million of long-term restricted cash. The Company only holds debt securities classified as available-for-sale.
As of December 31, 2023, we had $1,691.8 million of cash, cash equivalents and investments, comprised of $1,247.8 million of short-term investments, $428.4 million of cash and cash equivalents and $15.6 million of long-term restricted cash. The Company only holds debt securities classified as available-for-sale.

Other SRPT 10-K year-over-year comparisons